Lenders are already attempting to reduce their balance sheets by selling trillions of euros of assets, as well as so-called "liability management" exercises to cut the size of their debt piles. BNP Paribas, Lloyds Banking Group and Santander have all attempted with varying degrees of success to buy back or replace junior debt in an attempt to strengthen their core capital rations. However, Societe General analysts noted that these programs would not be enough to close the capital shortfalls worrying investors. The European banking system is a 31 trill.$ monster.The US printed some 16 trill from the beginning of the crisis to save the much smaller Wall Street . I assume that for saving the EU banking system and that includes the UK,the ECB and the BOE would have to 'create' money in a amount similar to 50% of world GDP.The moment France goes, 380 bill. black hole opens in Frankfurt and when Germany goes down,the city crashes as Britain holds some 400 bill in German debt. The world faces a cascading default in the largest economic unit on the globe. Frankly there is nothing that Paris,Berlin,London or Brussels can do about it, except for a complete reset of the system next year. Germany is however ahead of the curve since it endured 3 currency reforms in the past century and they realize when things are headed in that direction. So do it like us and go on a shopping therapy just before the crash,while you can still get something for the cash. I guess German angst was changed for escapism. The nation is completely schizophrenic: - 78% still mourn the DMark ; 80% are against Club Med bail outs ; 66% want to keep the euro ?!?!?! In the meantime, funding market conditions for euro zone banks continued to deteriorate last week despite the introduction by the European Central Bank of two long-term refinancing operations (LTRO) providing three-year funding. Euro zone banks shortage of collateral to borrow against, led the central bank to widen the pool of assets that "It" will accept, however analysts warned the move could be a "fast-track to destruction ". Excess bank usage of the three-year LTRO runs the risk of creating more banks who are dependent on ECB funds – ie. the classic model of "zombie" banks, said an analysts at Barclays Capital. A "zombie" bank is defined as one which relies on central bank funding to survive. 
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Saturday, December 17, 2011
Germany - completely schizophrenic: - 78% still mourn the DMark ; 80% are against Club Med bail outs ; 66% want to keep the euro ?!?!?!
Lenders are already attempting to reduce their balance sheets by selling trillions of euros of assets, as well as so-called "liability management" exercises to cut the size of their debt piles. BNP Paribas, Lloyds Banking Group and Santander have all attempted with varying degrees of success to buy back or replace junior debt in an attempt to strengthen their core capital rations. However, Societe General analysts noted that these programs would not be enough to close the capital shortfalls worrying investors. The European banking system is a 31 trill.$ monster.The US printed some 16 trill from the beginning of the crisis to save the much smaller Wall Street . I assume that for saving the EU banking system and that includes the UK,the ECB and the BOE would have to 'create' money in a amount similar to 50% of world GDP.The moment France goes, 380 bill. black hole opens in Frankfurt and when Germany goes down,the city crashes as Britain holds some 400 bill in German debt. The world faces a cascading default in the largest economic unit on the globe. Frankly there is nothing that Paris,Berlin,London or Brussels can do about it, except for a complete reset of the system next year. Germany is however ahead of the curve since it endured 3 currency reforms in the past century and they realize when things are headed in that direction. So do it like us and go on a shopping therapy just before the crash,while you can still get something for the cash. I guess German angst was changed for escapism. The nation is completely schizophrenic: - 78% still mourn the DMark ; 80% are against Club Med bail outs ; 66% want to keep the euro ?!?!?! In the meantime, funding market conditions for euro zone banks continued to deteriorate last week despite the introduction by the European Central Bank of two long-term refinancing operations (LTRO) providing three-year funding. Euro zone banks shortage of collateral to borrow against, led the central bank to widen the pool of assets that "It" will accept, however analysts warned the move could be a "fast-track to destruction ". Excess bank usage of the three-year LTRO runs the risk of creating more banks who are dependent on ECB funds – ie. the classic model of "zombie" banks, said an analysts at Barclays Capital. A "zombie" bank is defined as one which relies on central bank funding to survive. 
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BS TO THE MAX...Angela Merkel telephoned the Prime Minister yesterday morning and the German foreign minister will visit London on Monday, amid growing European disquiet over the behaviour of senior French figures in recent days.
François Fillon, the French prime minister, rang Nick Clegg, the Deputy Prime Minister, from Brazil in an attempt to stem the growing rift between France and Britain, which he himself helped trigger earlier this week.
It came as Fitch, the American ratings agency, concluded that a "comprehensive solution" to the eurozone crisis was "technically and politically beyond reach" and warned that France could lose its AAA rating next year. Earlier, the French finance minister, François Baroin, stepped up the apparently coordinated attacks on the British economy. He said in a radio interview: "The economic situation in Britain today is very worrying, and you'd rather be French than British in economic terms."
His comments followed those of Christian Noyer, the head of the Bank of France, who said that Britain's credit rating should be cut before that of France as this country had "as much debt, more inflation, less growth than us".
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