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Italian Bank Stocks Tumble On Draghi Threat He "Won't Hesitate To Fail Banks"
Across the board, we are seeing European bank stocks (most notably Italian) trading halted. The 5-7% plunge in prices - just when everyone is proclaiming victory in Europe - reflects an apparent concern that the tougher-than-expected European bank stress-tests will expose the Italian banks for the bloated sovereign debt issuance soaks that they have become. As Draghi himself noted, in a desparate plea to maintain some credibility "banks do need to fail" to prove the credibility of the exercise, adding "if they do have to fail, they have to fail. There’s no question about that.". Spain is also under pressure and it would appear the "smart"money that chose to catch some knives in Greek banks may just lose more than one finger...
and here are Goldman's views on the stress tests...
ECB releases AQR/test parameters
Today, October 23, the ECB released its Note on Comprehensive Assessment, laying down key parameters governing the Asset Quality Review (“AQR”) and stress-test (“test”) processes.
Hurdle rate parameters: mixed
(1) Hurdle rate definition: below expectations. Fully phased BIII hurdle not used – instead, ECB chose phase-in, at two dates: (1) the AQR will be based on January 1, 2014 “phase-in” (a large difference to fully phased BIII), whereas (2) the stress-test will be based on either 2016 or 2017 phase-in (closer proxy to fully phased).
(2) Level of hurdle: 8% phase-in. This is broadly comparable to a 7% fully phased BIII, but only on the stress-test hurdle (so, January 1, 2017) and for the banks that do not rely on state-aid capital.
(3) Leverage ratio: an overlay, but definition unclear. In our view, this meets market expectations.
(4) RWAs: using adjusted rather than reported; positive, in our view.
AQR parameters: positive
(5) Broad scope of AQR, with a wide focus including all problematic areas of assets; positive.
(6) Outcome of AQR: a fully standardized and comparable NPL definition, in line with EBA guidance; positive.
Scope of exercise: includes 124 banks
We see the list of banks subject to AQR/test – which includes all German Landesbanken, one Sparkasse – as positive.
ECB makes a positive start – execution is key
All in, we see the release of key parameters as a positive start. Ultimately, however, it will be the execution, the details and, importantly, the willingness of the ECB to be an “intrusive supervisor” that will determine the success of this exercise. With parameters close to Survey expectations, we now believe a number of failures (survey expectation: #11) and meaningful recapitalizations (survey expectations: €75 bn) are a more realistic outcome, especially in the non-listed portion of the bank list.
Survey findings:
and compared to expectations, the tests "look" tougher...
Moar Bail-Ins?
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Oh, so he'll give 'em an F and send 'em back to the discount window for a year.
BFD
imagine the printing needed should any of these banks fail. i think janet would blow her wad at the mere thought.
Please Lord of Heaven, let the same thing happen to the US banks for they are evil and do the devil's work. Amen.
I am in agreement to that prayer...with one stipulation... Let the same happen to US Banks...TODAY. Now I thank God that they are failed.
Now I wonder just how long it will take before the rest of the Muppets realize it?
Perhaps we need to pray that the Muppets realize it? Because when they lose confidence it is over.
hehehehe......sure....they'll fail.......when Janet pulls the last lever on the last quadrillion
Damn...You spoiled my dreams. I was looking forward to becoming a Quintillionaire.
Everyone is a Quintillionaire in Zimbabwe. They have more Quintilionaires per Capita than any other place in the World. WE need to have that type of Failure in the United States.
Then the Muppets will finally awaken and NEVER TRUST THEIR GOVERNMENT, OR A REAL ESTATE BROKER, WALL STREET, A FINANCIAL ADVISOR, A REPORTER ON TEE VEE, A POLITICIAN, A LAWYER OR A BANKER AGAIN.
And that would stop her from printing why???
Faber is right. Sky's the limit, until it all fails.
When does Deusche bank fail the tests?
imminently.
Awesome Max. That's the funniest thing i've seen all day.
Fact that they are persueing these AQR would make a person think they have looked into all possible side-effects when assessing 124 stinking balance sheets (which I think is not possible). Do they really want to do this? 124 banks? Crazy regulators. They obviously don't know what they're getting themselves into. I can already imagine: some QAR results leaked early to press, not all banks assessed yet, huge bank run and capital controls in the entire EU.
One thing is sure, they do act in a credible manner. Now let's see if there's a 'acceptable' outcome.
Rats fear their free cheese supply is in danger.
I just learned rats don't like cheese actually. "lactose intolerant" apparently.
the underlying story: ECB openly admits there was zero credibility in all the previous tests.
Is this from the Onion?
Cool - Bankster failure??? How novel!
Monty Python quote:
Father: The mill's closed. There's no more work. We're destitute.
Children: Ohhhhh.
Father: I'm afraid I have no choice but to sell you all for scientific financial experiments.
The Labor Israeli's sold thousands of Jewish children, apparently a large number for scientific experiments:
http://www.conspiracyarchive.com/Commentary/Yemenite.htm
It wasn't voluntary.
Empty threat. Buy these banks equities hand over fist. Draghi is GS lapdog and GS wants to buy Italian banks equities in the short-term.
Nah, they'll just buy some mid-tier debt and do their best to bankrupt the company to be in the equity place when the recapitalization happens.
Yep, if not an empty threat, Draghi will get 3 dead fishes wrapped in newspaper delivered to him by "Express Courier" from the ECB, IMF and Fed Reserve.
http://www.abc.net.au/news/2013-10-16/a-vampire-squid/5025708
In Portugal, people are scrambling to buy/invest in government bonds, bank bonds and are making other risky investments. This is a fact - listen, I have seen with my own eyes how careless people are with their savings - they are putting their money into RISKY investments to get an extra percent or two.
Like lambs to the slaughter house ...
"Rise of the Sheeple" indeed.
No wonder Draghi likes his Gold...
and I won't hesitate to eat my shoe if more than one small token bank fails
Draghi, the great red dragon.
Rev 12:3 And there appeared another wonder in heaven; and behold a great red dragon, having seven heads and ten horns, and seven crowns upon his heads.
read again your copy, it's a blue dragon with seventeen heads and seventeen crowns. perhaps eighteen, next year
"...having seven heads and ten horns, and seven crowns upon his heads."
Primary dealers.
Nicely timed with one month anniversary after German elections
Draghi, before you pull the plug on the banks. Allow your people to remove their funds first. The bank is a creditor to all deposits issued. Closing the bank down prior to withdrawal means the depositor will never see their money. You simply don’t want that crisis dangling around your neck. winks
WoW, even the Draghi Kraken evolves from "Whatever it takes" to "let them fail".
Has Count Dracula of ECB, adept of QE blood, now become a secret ZH follower? A convert to Tylerism after having been a practitioner of the Squid.
"...become a secret ZH follower?" nah, ZH makes so much about Draghi coming from the Squid Academy that it continuously forgets that he was an Italian Central Bank chief, first
which then again makes everyone on ZH scream "central banker"!, forgetting or never, ever knowing in the first place what kind of history and traditions the core national banks of the ECB have, particularly those of Germany, France and Italy. with many, many differences in outlook compared to the BoE and the FED, and many harsh lessons learned
the situation is similar to those english-speaking media who never understand what the Council is, in the EU org. everybody looks at Draghi and forgets the 17 national bank chiefs who vote on the ECB policies
it's not Tylerism - if anything like that exists at all, then I have yet to read a Tyler article where policy is adviced. it's "Classic National Banking", continental style
including the threats to the markets (see "whatever it takes") and the threats to the banks (see "if they have to fail, they will fail")
we'll see what happens
as usual...top shelf FP. and yes they really do call him Dracula folks. Been reading up on a thing called "familiars" actually. "steal your mana" actually.
btw, did anyone here understand yet that famous Draghi-to-ZH reply about "...written by people who don't understand how much political capital has been invested in the EUR?"
falak, you probably know that better than me: even Marine Le Pen is solidly behind the EUR. she'd scrap the EU, immediately. but not the EUR
why? ;-)
I am watching a TV program right now on the fall out of US Big Brother NSA operations (millions of telephone conversations, tip of the iceberg), concerning France and the deeper implications of keeping "ad vitam aeternem" private information "funny private photos etc." of you at age 20, which can be used against you if ever you want to become president of your country. Beyond all this "terrorism" BS, the average frenchman is now understading the huge, incommensurable travesty of individual liberties that companies like Google/ Facebook/Yahoo play with the NSA to do whatever they like all over the world. Nobody has the underwater cables and antenae and Internet expertise to accumulate on such a sweeping basis personal data all over the world; of people from 7 to 70 that can come back and bite you 20 years from now! THEY OWN YOUR IMAGE and your future.
I think such an EMpire indicates why these nation states of Europe need a COMMON strategy accross continent to have ONE curency and ONE information privacy strategy to face such a successor to STasi.
The Euro has been made into a crap shoot to protect the banks. But for Europe to exist one day as a united cultural entity it needs to build more solidarity around a concept we inherited from the Greeks : VALUE SYSTEMS. If we lose these values we lose all IMO.
We do not have the same philosophical values as the US admin and maybe US civil society. Cos these guys in Google and FB feel that the photo you post on Facebook or the surfing you do via Google belongs to THEM, not to YOU.
Whereas you posted that photo in GOOD faith thinking it was yours to post and yours to store or to delete. It does not belong to the CORPORATE that hosts it in your mind as user.
The American corporates affirm it belongs to them ad vitam aeternem. This is a question of value systems...
Our problem is that this financial crisis and this information robbing crisis, unearthed by these whistleblowers, have caught Europe with its pants down; these politicians cum bureaucrats are partners to this crime by being in cahoots with US banks /shadow banks and US corporates and US admin that have gone totally big brother. Europe is STYMIED.
It has to get its head out pretty fast from this shit storm. Unfortunately it looks like the shit storm will bring this EUro solidarity down. I hope I'm wrong.
So yes I believe in the Euro in some halcyon period when the storm is over but not in this current EU crap show.
Falak, it sounds bad but publishing photos of someone puking on their shoes at a frat party is nothing compared to the reality.
They (our presumed masters) own all account info, all passwords.
Your e-mail addresses and passwords.
Your cell phone numbers and passwords to voicemail.
They can package our stuff and sell it to Estonian or Albanian gangs (or Chinese or Taiwanese or Nigerian!) who will auth bank transfers and drink your milkshake from 3,000 miles away. Someone with knowledge of the system and a good American accent can fuck your shit beyond repair or even demonstrable proof of wrongdoing, in half an hour.
Try insuring against that; and collecting.
They just want to forestall a bank run at this point. That's why cap controls are coming and PM transactions will eventually be outlawed.
There is so much of this material out there, in the hands of so many, that collapse based on bank runs and general pandemonium is imvho not a question of if but when.
There is no way to avoid all the pain, but you can save most of what is yours by taking the next exit off of the electronic highway. Jim Sinclair among others has been pounding the desk in favor of complete withdrawal, or as near-complete as possible, for several years now.
Someone tell me I am exaggerating or that "they won't let it happen"...!
Oh please, get this bullshit off the news.
OT: Good LOL here http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1382558400000&chddm=1103&chls=IntervalBasedLine&cmpto=NASDAQ:TSLA&cmptdms=0&q=NASDAQ:NFLX&&fct=big&ei=DvFnUuiMKM7H0AH3jwE
They're knocking the shares down, so Draghi can later announce ECB bond purchases of sovereign debt AFTER he has purchased a diversified portfolio of bank stocks that will ramp back up right after his "happy days are here again" announcement.
Cha-ching! Wonder where Mario will offshore his profits?
What happened to "Whatever it takes!"?
Psychos - every one of them.
But now that the filthy rich have failed to cut "bail-ins" out of the equaltion, the CBs know they have a blank check to write for whatever they need out of your account.
But as they say, "Sooner or later you run out of other people's money to spend."
The only ones who won't get touched on bail-ins are the families that are at the very top, telling the CBs what to do.
Everybody else - get your money out while you still can - the CBs are getting ready to steal every penny they can get their hands on.
-30-
The euro is just a unit of account, it DOESN'T EVEN EXIST. What does exist is euro-denominated credit.
They don't steal euros. They DEFAULT on euro-denominated credit.
People get what they deserve. When will they learn to stop investing in insolvent banks??
It is about time!
The tests have been set at such easy levels that no quoted European bank will fail them. How could Draghi fail a bank - he's a Goldman guy after all.
yeah well he ain't the Prime Minister of France that's fer sure.
SLOVENIA.
And in next Month's News...
In an unrelated story, Mario Draghi was shot by a crazed assassain, a LONE gunman. It has been reported that the gunman had escaped from a Mental Institution and was refusing his powerful psychotropics.
It was just a sad coincidence as there was no conspiracy. There is no connection to the death of Draghi and his declarations about allowing Banks to fail last month.
There is no need to spread Conspiracy Theories as the Nation of Italy is in mourning. Those Conspiracy Theorists just have no respect for the dead or the families of victims and need imprisonment.