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

Tyler Durden's picture


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 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Collapse Bitchez!

Wed, 09/14/2011 - 13:09 | Link to Comment nope-1004
nope-1004's picture

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 | Link to Comment X.inf.capt
X.inf.capt's picture

its a loosing battle, 1005,

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


Wed, 09/14/2011 - 14:32 | Link to Comment upWising
upWising's picture

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!


They know what they are doing!~


Wed, 09/14/2011 - 21:19 | Link to Comment Thomas
Thomas's picture

We need more stress tests.

Wed, 09/14/2011 - 13:04 | Link to Comment CvlDobd
CvlDobd's picture

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

Wed, 09/14/2011 - 13:07 | Link to Comment alien-IQ
alien-IQ's picture

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 | Link to Comment CvlDobd
CvlDobd's picture

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 | Link to Comment NEOSERF
NEOSERF's picture

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

Wed, 09/14/2011 - 13:05 | Link to Comment Id fight Gandhi
Id fight Gandhi's picture

And markets rally on

Wed, 09/14/2011 - 13:05 | Link to Comment xtop23
xtop23's picture

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

Wed, 09/14/2011 - 13:08 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

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 | Link to Comment sampo
sampo's picture

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

Wed, 09/14/2011 - 13:10 | Link to Comment newworldorder
newworldorder's picture

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 | Link to Comment alien-IQ
alien-IQ's picture

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

Wed, 09/14/2011 - 13:43 | Link to Comment web bot
web bot's picture

You just made my day...

Wed, 09/14/2011 - 14:12 | Link to Comment Cliff Claven Cheers
Cliff Claven Cheers's picture


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

Wed, 09/14/2011 - 13:13 | Link to Comment DirtMerchant
DirtMerchant's picture

"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 | Link to Comment chaartist
chaartist's picture

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 | Link to Comment TheLooza
TheLooza's picture

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

Wed, 09/14/2011 - 13:15 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

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 | Link to Comment SheepDog-One
SheepDog-One's picture


Wed, 09/14/2011 - 13:16 | Link to Comment milanitaly
Wed, 09/14/2011 - 13:16 | Link to Comment jtmo3
jtmo3's picture

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

Wed, 09/14/2011 - 13:22 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

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


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


Wed, 09/14/2011 - 13:18 | Link to Comment ex VRWC
ex VRWC's picture

'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 | Link to Comment SheepDog-One
SheepDog-One's picture

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

Wed, 09/14/2011 - 13:18 | Link to Comment TradingJoe
TradingJoe's picture

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

Wed, 09/14/2011 - 13:19 | Link to Comment Sudden Debt
Sudden Debt's picture

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 | Link to Comment Syrin
Syrin's picture

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 | Link to Comment Sudden Debt
Sudden Debt's picture





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.


what's your point?



Wed, 09/14/2011 - 13:44 | Link to Comment Syrin
Syrin's picture

Yeah I'm with you.

Wed, 09/14/2011 - 13:58 | Link to Comment SheepDog-One
SheepDog-One's picture

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

Wed, 09/14/2011 - 13:20 | Link to Comment Tic tock
Tic tock's picture

So shoot, you corrupt fuggers

Wed, 09/14/2011 - 13:26 | Link to Comment spiral_eyes
spiral_eyes's picture

Kotlikoff says the problem is over-leverage.

He's wrong.

The problem is the ridiculous, incoherent Euro system. 

Wed, 09/14/2011 - 14:06 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

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 | Link to Comment xtop23
xtop23's picture

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 | Link to Comment Belarus
Belarus's picture

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 | Link to Comment baseball13
baseball13's picture

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 | Link to Comment PulauHantu29
PulauHantu29's picture

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

Wed, 09/14/2011 - 13:53 | Link to Comment baseball13
baseball13's picture

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


Wed, 09/14/2011 - 14:00 | Link to Comment SheepDog-One
SheepDog-One's picture

Well buy your debt for slavery, in other words.

Wed, 09/14/2011 - 13:56 | Link to Comment SheepDog-One
SheepDog-One's picture

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 | Link to Comment Georgesblog
Georgesblog's picture

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.



Wed, 09/14/2011 - 15:53 | Link to Comment Ineverslice
Ineverslice's picture

















Wed, 09/14/2011 - 18:01 | Link to Comment s2man
s2man's picture

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

Do NOT follow this link or you will be banned from the site!