Everyone talks about the amount of CDS's that have been issued and how they could all be paid without a collapse of the entire banking system. I would expect that every financial institution that has issued CDS insurance has themselves hedged the risk with another institution that has itself hedged the risk they took and so and so on. The NET liabilities of each financial institution would therefore be far less than the CDS's they have issued. The way to do with this is by setting up of clearing house for CDS claims in the event of a default. Any thoughts on this idea, how it would work and how effective it would be? The European Central Bank admitted it had held meetings about providing emergency funding to the region's struggling banks, however City figures said a "collateral crunch" was looming. "If anyone thinks things are getting better then they simply don't understand how severe the problems are. I think a major bank could fail within weeks," said one London-based executive at a major global bank. Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding. "The system is creaking. There is a large amount of stress," said Anthony Peters, a strategist at Swissinvest, pointing to soaring inter bank lending rates. MY COMMENT IS : Since The ECB has already acted this week to help the bank liquidity crisis in Europe, bu it did not get the prominence in the media I felt it deserved but it provided 50.7 billion US dollars of 84 day liquidity, I'm publishing this on this blog of mine. Perhaps in these days of numerical inflation 50 billion isn’t what it was! This was from the central bank liquidity swaps I have been discussing for a couple of months and as the funds are in effect borrowed from the US Federal Reserve if the crisis was a western film this stage would see the arrival of the US Cavalry! Whether this will turn out to be Little Big Horn or a triumph remains to be seen." 
Access Investments-Building Awareness - European Union-ROMANIA
Saturday, December 10, 2011
If anyone thinks things are getting better then they simply don't understand how severe the problems are.
Everyone talks about the amount of CDS's that have been issued and how they could all be paid without a collapse of the entire banking system. I would expect that every financial institution that has issued CDS insurance has themselves hedged the risk with another institution that has itself hedged the risk they took and so and so on. The NET liabilities of each financial institution would therefore be far less than the CDS's they have issued. The way to do with this is by setting up of clearing house for CDS claims in the event of a default. Any thoughts on this idea, how it would work and how effective it would be? The European Central Bank admitted it had held meetings about providing emergency funding to the region's struggling banks, however City figures said a "collateral crunch" was looming. "If anyone thinks things are getting better then they simply don't understand how severe the problems are. I think a major bank could fail within weeks," said one London-based executive at a major global bank. Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding. "The system is creaking. There is a large amount of stress," said Anthony Peters, a strategist at Swissinvest, pointing to soaring inter bank lending rates. MY COMMENT IS : Since The ECB has already acted this week to help the bank liquidity crisis in Europe, bu it did not get the prominence in the media I felt it deserved but it provided 50.7 billion US dollars of 84 day liquidity, I'm publishing this on this blog of mine. Perhaps in these days of numerical inflation 50 billion isn’t what it was! This was from the central bank liquidity swaps I have been discussing for a couple of months and as the funds are in effect borrowed from the US Federal Reserve if the crisis was a western film this stage would see the arrival of the US Cavalry! Whether this will turn out to be Little Big Horn or a triumph remains to be seen." 
Subscribe to:
Post Comments (Atom)
6 comments:
Lets get it over with,the debts are unpayable so lets just leave them unpayed,let the $750 Trillion of CFSD,s collapse as well then move onto a currency of Gold and Silver or backed by Gold and Silver.Only one slight problem the $ would not be the worlds reserve currency and America would get shitty about not having a pot to you know what in.Hence we will get a totally uncontrollable collapse in Fiat currencies,economies and Sovereign debts leading to pensions and benefits being unpaid and the numbers of the unemployed looking like international telephone numbers.Just exactly what is going to happen but obviously Politicians will not tell you this,cannot have bank runs and precious metal prices doubling by the hour so we have to put up with useless crap from overpayed,talentless gravy trainers who have never done a hard days work in their lives,they are the ones in for a real shock.
Die Todesstunde dieses Bund? Sie kommt, sie kommt....
The Hour of Death of this League? It is coming, it is coming....
As a Swiss (proto-Commie) shouted as he burned at the stake in the Peasant Wars "Die Wahrheit is untoedlich" "The Truth never dies".
The Truth is: Eurosocialism is doomed. It's just the transition that will be unpleasant.
It is patently obvious to all but Merkozy and the Eurocrats that the continental European banking system is for all intens and purposes insolvent today if the sovereign debt they hold were marked to market instead of marked to fantasy land
This is why Sarkosy wanted to grab control of the city of London, as a number of French Banks are close to going under with all their debt and with capital fleeing away from the Eurozone. The lastest indications are the at least one Spanish Bank is on the brink and even a German Bank. This latest EU summit has not tackled the immediate problem at all, and the flight of capital will continue as everyone else sells Eurozone related holdings. That famous phrase comes to mind "You ain't seen nothing yet!" hold on tight to any secure assests like UK, US or Asian
As the euro collapses after years of governments spending money which they never had the best thing to do is withdraw all your savings to invest in tangible assets, as many banks will be unable to give you anything over and above the amount guaranteed by the state.
Bank deposits with the ECB now stand at their highest level since June 2010 at €905bn (£772bn) as lenders withdraw deposits held with their peers and put them into the central bank. At the same time, banks in major eurozone countries such as France and Italy have become increasingly reliant on central bank funding. This follows the trend seen in smaller countries like Ireland where lenders have effectively becomes taxpayer-funded "zombie" banks.
Alastair Ryan, a banks analyst at UBS, said there would be "no Lehman moment" – or single catastrophic event – for the European banking sytem, but added that without a full backstop of bank liabilities by governments the system would "struggle to finance itself in the next year in a durable way".
"The system at the moment hasn't got funding of a duration that allows it to function, so it's failing," he said.
Others think the eurozone banks are heading for a catastrophe and the worry is growing that a major bank could collapse within weeks.
The results of the fourth round of European Banking Authority (EBA) stress tests conducted in just under 18 months pointed to a €115bn capital shortfall in the eurozone financial system, with German banks showing the most notable deterioration in their core capital ratios.
Post a Comment