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Excerpts From EU Report Stating Euro Crisis Contagion Has Spread And Is Now Systemic

Submitted by Tyler Durden on 09/14/2011 12:59 -0400

The latest headline is in, and judging by the swoon in the EURUSD it is not pretty. Sure enough, this one has nothing to do with the Coneheads coming to rescue the world, and everything to do with an EU document which says that the shit is about to hit the fan. Yep: the EU is now holding the gun against its head and threatening to shoot. Furthermore, the document warns ministers this week about the threat of a renewed credit crunch as a "systemic" crisis in sovereign debt spills over to banks, according to EU documents. In one a series of bluntly worded reports prepared by officials for a meeting of EU ministers on Sep. 16 and 17, they warn: "While tensions in sovereign debt markets have intensified and bank funding risks have increased over the summer, contagion has spread across markets and countries and the crisis has become systemic."

Selected highlights from the documents via Reuters:

This highlights a "risk of a vicious circle between sovereign debt, bank funding and negative growth".

In the documents, the influential Economic and Financial Committee, which prepares the agenda for discussion among ministers, levels harsh criticism at countries including Spain for not doing enough to reinforce its banks following dismal results in stress tests.

One of the reports, dated Sep. 13, cautions that the "spill-over effects" could feed "a dangerous negative loop between the financial and the real sectors (of the economy), whereby funding problems and ... risk aversion ... may lead to ... deleveraging by banks, thereby generating a credit crunch, in some Member States".

Outlining what they describe as spreading contagion and a sovereign debt crisis which they say has "entered a new phase", officials highlight the difficulties experienced by European banks in borrowing.

"Despite the considerable strengthening of capital positions compared to the levels of 2008-2009, European banks have recently experienced market funding difficulties resulting amongst others from stress on wholesale liquidity markets, high spreads in secondary markets, and, for some EU banks, growing difficulties in accessing funding from U.S. counterparties," one of the reports says.

To counteract dwindling confidence in EU banks, officials recommend to ministers that "a further reinforcement of bank resources is advisable at this juncture".

They criticise some countries for not taking such measures -- which would include state-backed capital injections in flagging lenders -- after recent stress tests.

"This is important for banks that have failed the stress test, but also for those that have passed the test but with capital levels close to the relevant threshold."

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Wed, 09/14/2011 - 13:01 | 1669087 Long-John-Silver

Collapse Bitchez!

Wed, 09/14/2011 - 13:09 | 1669109 nope-1004

Good thing Geithner is going over to Europe to help the situation. The EU needs to come up with more inventive, dishonest, subversive, and diabolical ways to keep the ponzi going. Geithner is the man!!!

If any y'all been watching the PM market, you can see ongoing central bank intervention. A default is coming. Team Oscama trying like hell to keep a lid on PM's.

Wed, 09/14/2011 - 13:17 | 1669196 X.inf.capt

its a loosing battle, 1005,

all the're doing is giving us time to buy PM's

THANK YOU!!!

Wed, 09/14/2011 - 14:32 | 1669633 upWising

This "situational transitional rough patch" is going to take Timmy-Tim-Tim some time to completely solve AND I hear he only has enough Frequent Liar, er FLYER miles for a One Way Ticket. Our Loss - Europe's Gain.

Drink ALCOHOL! (If a Little is Good, A LOT IS BETTER).
Watch Television! (It's ALL True! That's why it's on Tee Vee!)
Max Out the Credit Card! (Go Ahead! QVC Yourself! You Deserve to Gift Yourself!)
Take Your Medication As Directed!
BUT ABOVE ALL.....

FAITH IN THE SYSTEM.

They know what they are doing!~

Wed, 09/14/2011 - 21:19 | 1671402 Thomas

We need more stress tests.

Wed, 09/14/2011 - 13:04 | 1669102 CvlDobd

Is that what's driving the big spike in TLT?

Wed, 09/14/2011 - 13:07 | 1669123 alien-IQ

the same thing that's driving everything up: a potent mix of kool-aid, bullshit and garden variety lies from powerful places.

in other words...the usual.

Wed, 09/14/2011 - 13:40 | 1669321 CvlDobd

Ah yes. I forgot about that stuff.

edit: I forgot there was an auction of 30 years today. Must have been well bid.

Wed, 09/14/2011 - 13:05 | 1669106 NEOSERF

Real enough for me...just moved my son's 529 into bond/cash

Wed, 09/14/2011 - 13:05 | 1669108 Id fight Gandhi

And markets rally on

Wed, 09/14/2011 - 13:05 | 1669113 xtop23

Yet another Hank Paulson moment. The bankers want theyre stimulus !!! pathetic

Wed, 09/14/2011 - 13:08 | 1669114 GeneMarchbanks

To be continued... I'm not asking for much but I want to see one, just one, French bank crash and burn. I don't care if it's SocGen, Agri or BNP. You pick Mr.Market.

Wed, 09/14/2011 - 13:08 | 1669124 sampo

Really, if one wants to kill himself, there's nobody that can stop him wanting to do so.

Wed, 09/14/2011 - 13:10 | 1669127 newworldorder

EU leaders do not know what to do. They do not have the political mandate at each coutry level to proceed with further bailouts, while they are being pushed to do so by euro funding considerations and bankers. The apt phrase here is , "deers caught in the headlights."

Wed, 09/14/2011 - 13:09 | 1669136 alien-IQ

this should send the /ES to a new high for the day because...well...just because.

Wed, 09/14/2011 - 13:11 | 1669157 Cliff Claven Cheers

http://thevictoryreport.org/2011/09/14/nigel-farage-greece-under-dictatorship/

WATCH – Nigel Farage – Greece Under Dictatorship

Wed, 09/14/2011 - 13:43 | 1669344 web bot

You just made my day...

Wed, 09/14/2011 - 14:12 | 1669514 Cliff Claven Cheers

Cheers,

I am surprised this guy is still walking the earth speaking truth like that.

Wed, 09/14/2011 - 13:13 | 1669170 DirtMerchant

"risk of a vicious circle between sovereign debt, bank funding and negative growth"

I think the proper term here is "swirl" which is the circular pattern shit takes as it spins around the bowl when a flush occurs....

Wed, 09/14/2011 - 13:13 | 1669171 chaartist

I wonder if they r so smart, or maybe they will see it on the road. But ECB could be the largest Enron fraud vehicle in the history. They will burry there all the debts and everyone will be left with their own currency, hard one..

Wed, 09/14/2011 - 13:15 | 1669179 TheLooza

These fuckers think they can get QE3 and Eurobunk without real market pain. And they are probably right.

Wed, 09/14/2011 - 13:15 | 1669182 dick cheneys ghost

I get the feeling that the upcoming financial collaspe and events in the Middle East are set to converge at the same time...........Is this all by design?

Wed, 09/14/2011 - 14:03 | 1669457 SheepDog-One

Yes!

Wed, 09/14/2011 - 13:16 | 1669187 milanitaly

Here we go!

http://videochat.corriere.it/index_H2401.shtml

Wed, 09/14/2011 - 13:16 | 1669188 jtmo3

Fucking idiot. Have they not looked at the stock markets? Geez.

Wed, 09/14/2011 - 13:22 | 1669193 slewie the pi-rat

slewie declares chubby checker week!!!!!!!!

must."finance".banks.........

.......no.other.solution.except."default".use."sovereigns".4."backstop".must."finance".insolvent.zombies.foerever.

chet atkins "unplugged": Chet Atkins and Hank Snow "Limbo Rock" - YouTube

BiCheZ!!!!!!!!!!!!

Wed, 09/14/2011 - 13:18 | 1669204 ex VRWC

'Systemic crisis' are just words they are dragging out to justify the next round of wealth transfer. They need to start calling it that to justify themselves.

Wed, 09/14/2011 - 13:57 | 1669422 SheepDog-One

Yes but last time they rolled out 'systemic crisis' was when markets fell 50%....today they can hardly contain 3% rises daily!

Wed, 09/14/2011 - 13:18 | 1669206 TradingJoe

Meat grinding at its best levels ever! Until they get into that machine too!

Wed, 09/14/2011 - 13:19 | 1669210 Sudden Debt

I'll miss those day where you could still wonder if there's a sollution to the problem.

Shoulda, woulda,coulda, BUT DIDN'T!

Wed, 09/14/2011 - 13:19 | 1669214 Syrin

The Euro crisis has spread and is systemic ?!?!?!? REALLY ?!?!?!

IS grass green?

IS the sky blue?

Are the Kennedys gun shy?

Wed, 09/14/2011 - 13:34 | 1669291 Sudden Debt

actually....

The grass is ONLY GREEN ON THE OTHER SIDE NOW

I only SEE DARK CLOUDS so the sky is a black/grey these days

And most of the Kennedys tried to catch bullets WITH THEIR TEETH.

so...

what's your point?

Wed, 09/14/2011 - 13:44 | 1669350 Syrin

Yeah I'm with you.

Wed, 09/14/2011 - 13:58 | 1669425 SheepDog-One

And best part about the new systemic crisis is its GREAT news!

Wed, 09/14/2011 - 13:20 | 1669215 Tic tock

So shoot, you corrupt fuggers

Wed, 09/14/2011 - 13:26 | 1669255 spiral_eyes

Kotlikoff says the problem is over-leverage.

He's wrong.

The problem is the ridiculous, incoherent Euro system.

http://azizonomics.com/2011/09/14/is-leverage-the-problem-again/

Wed, 09/14/2011 - 14:06 | 1669478 slewie the pi-rat

the problem is bankster-induced choas

whether from a "captain" or a "professor"~~~choas is choas

Profesor Chaos - YouTube

Professor Chaos Is Born (Season 6, Episode 6) - Video Clips - South Park Studios

South Park - The Coon - YouTube

Wed, 09/14/2011 - 13:39 | 1669266 xtop23

Thats the whole thing..... if they dont get stimulus theyll pull the financial trigger and itll be financial armaggeddon . So ? Who cares really... theyre going to do it anyway but at least if they pull it now there MIGHT be a few plebs that have a little cash .

The banks HAVE the cash on hand they're just worried about all those derivatives that are floating around out there ready to explode so they wont lend.

I guess thats the point though. We still have a little dry powder they want to squeeze so were defenseless in the later innings.

Wed, 09/14/2011 - 13:34 | 1669288 Belarus

Oh....that's why all the European indices rallied hard today. It makes more sense now that it doesn't make sense at all.

Wed, 09/14/2011 - 13:35 | 1669293 baseball13

The most recent rumor/non-rumor is that China will indeed come to the rescue of the EU. I think i know how it will go down...

Let's see, they have $1.5 trillion in US dollar reserves which, as they know, are practically worthless and cannot get rid of fast enough...

The EU is tight on liquidity and debt is swallowing up whole countries...the relatively well capitalized countries are shying away from EU entanglements...

The Chinese say, "Let's put these dollar reserves to good use! We'll come in and bail out the EU with our reserves! Only thing is, we will require collateralized obligations. When the dollar collapses, F %#$ them! and we'll take the collateral!"

Or will this lead to WWIII?

Wed, 09/14/2011 - 13:46 | 1669354 PulauHantu29

Dow up 135 on the good news. How bad is it....really?

Wed, 09/14/2011 - 13:53 | 1669397 baseball13

..and here's the news from China: "China Offers to Buy Italian Debt - For a Price"

http://finance.yahoo.com/blogs/daily-ticker/china-offers-buy-italian-debt-price-152049480.html?sec=topStories&pos=7&asset=&ccode=

Wed, 09/14/2011 - 14:00 | 1669440 SheepDog-One

Well buy your debt for slavery, in other words.

Wed, 09/14/2011 - 13:56 | 1669415 SheepDog-One

Whatever! Its all good news apparently to tack on another +150 to the DOW in preparation for >10,000 DOW so Bernank can queef out Qeueef3 next week! WTF!

Wed, 09/14/2011 - 14:18 | 1669551 Georgesblog

The currencies themselves are the disease. The liquidity shortfalls are the synptoms of fiat addiction. We are seeing the withdrawal. The patient's vital signs are not good.

georhttp://georgesblogforum.wordpress.com/2011/09/14/legal-reality-newslette...

Wed, 09/14/2011 - 15:53 | 1670054 Ineverslice

Wed, 09/14/2011 - 18:01 | 1670591 s2man

can you say "systemic risk"? the phrase which has permiated articles and blogs thanks to Charles Smith's Unconventional Guide to Investing in Troubled Times

Excerpts From EU Report Stating Euro Crisis Contagion Has Spread And Is Now Systemic

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