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Mikhail Liebenstein

Banks May Have To Be Killed

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http://www.telegraph.co.uk/finance/economics/7980291/EU-austerity-policies-risk-civil-war-in-Greece-warns-top-German-economist-Dr-Sinn.html

This is an interesting article which explains why a 30% internal devaluation (ie a pure fall in assets prices  in actual Euros) can't take place in Greece. Dr Hans-Werner Sinn, head of the prestigious IFO Institute in Munich says Greece can't expect to devalue 30% in actual Euros without near Civil War breaking out, so instead it should drop out of the Euro and then devalue/default even if this destroys its banks.

I say we should have killed our banks too.

Ride on the sovereign defaults.

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http://www.telegraph...st-Dr-Sinn.html

This is an interesting article which explains why a 30% internal devaluation (ie a pure fall in assets prices in actual Euros) can't take place in Greece. Dr Hans-Werner Sinn, head of the prestigious IFO Institute in Munich says Greece can't expect to devalue 30% in actual Euros without near Civil War breaking out, so instead it should drop out of the Euro and then devalue/default even if this destroys its banks.

I say we should have killed our banks too.

Ride on the sovereign defaults.

It is ONLY about banks....they are going to be in 150% more debt very soon...best to default and lose a few banks.

Savers are shagged already...they just dont realise it yet.

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One of the issues is creditors is a nice way of saying depositors. When banks lend to each other and big time bond investors they make sure they are above depositors in precedence in case of bankruptcy. At some point barring an unlimited bailout from the rest of the Eurozone the creditors do need to take a haircut.

What happens is I sell my house to you for £400,000. You borrow 380k of which the bank conjures into existence say 340k. I deposit the entire 400k into my bank account. But it turns out you cannot keep up with the debt payments and default. The bank moves in and seizes the house but now its only worth 200k.

So money is destroyed the question is who now takes the loss? If losses at a bank exceed ~7% of the liabilities that wipes out the regulatory capital cushion. Generally ~40% or so of the liabilities are deposits. So for arguments sake lets say the total severity of the losses was 20% of the liabilities. And ~40% of the liabilities are deposits. The math works out that 13/40= 32.5%. All depositors would take a 32.5% haircut on their deposits.

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http://www.telegraph.co.uk/finance/economics/7980291/EU-austerity-policies-risk-civil-war-in-Greece-warns-top-German-economist-Dr-Sinn.html

This is an interesting article which explains why a 30% internal devaluation (ie a pure fall in assets prices  in actual Euros) can't take place in Greece. Dr Hans-Werner Sinn, head of the prestigious IFO Institute in Munich says Greece can't expect to devalue 30% in actual Euros without near Civil War breaking out, so instead it should drop out of the Euro and then devalue/default even if this destroys its banks.

I say we should have killed our banks too.

Ride on the sovereign defaults.

Spain has to do the same thing, exit euro and devalue by 25-30%. There is no other option really. I don't think re-entering the euro is option in reality, faking the stats to gain entry wouldn't be allowed the second time.

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Surely if you cut wages AND prices by the same amount it doesn't make much difference?

I guess those crazy Greeks just like rioting.

So, either the Greeks start economising, say by doing the washing up instead of smashing everything or working until they are sixty, or Europe will collapse.

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Surely if you cut wages AND prices by the same amount it doesn't make much difference?

I guess those crazy Greeks just like rioting.

So, either the Greeks start economising, say by doing the washing up instead of smashing everything or working until they are sixty, or Europe will collapse.

Doesn't work like that though. Debts need reducing too and the price of BMWs isn't going to fall unless I've missed the existence of a BMW plant in Corfu.

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Doesn't work like that though. Debts need reducing too and the price of BMWs isn't going to fall unless I've missed the existence of a BMW plant in Corfu.

In which case, there is no demand for BMW....a LADA will have to do.

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The Euro was a stupid idea from day 1 and doomed to failure from the start.

What is it with the French and Germans? Why are they so obsessed with trying to create a European superstate?

Why does Britain continually have to save Europe from its own stupidity?

What will it cost this time in blood and treasure?

:(

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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