E U Need To Fire Up The Helicopters: N O W

[Realistbear]

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8132689/Europe-stumbles-blindly-towards-its-1931-moment.html

Europe stumbles blindly towards its 1931 moment

It is the European Central Bank that should be printing money on a mass scale to purchase government debt, not the US Federal Reserve.

Unless the ECB takes fast and dramatic action, it risks destroying the currency it is paid to manage, and allowing a political catastrophe to unfold in Europe.

If mishandled, Ireland could all too easily become a sovereign version of Credit Anstalt - the Austrian bank that brought down the central European financial system in 1931, sent tremors through London and New York, and set off the second deeper phase of the Great Depression, the phase when politics turned ugly.

“Does the ECB understand the concept of contagion?” asked Jacques Cailloux, chief Europe economist at RBS. Three EMU countries have already been shut out of the capital markets, and footloose foreign creditors hold €2 trillion of debt securities issued by Spain, Portugal, Ireland and Greece.

EU have imbalances the USA does not. Contagion does not apply neither does nationalism and the VI that tags along with that.

[aa3]

To be a great global currency it needs a fairly stable value.. but in addition and something that adds to its value is for it to have incredible liquidity. If Euros are rare and hard to get, or merely unpredictable in their availability.. ironically it decreases the value of the currency.

If I'm the only guy in my Andean village who has and can get more Euros they are not to useful.

If we saw these countries which have run great surpluses like Germany step in now with great consumption it would really lift up the boats for countries like Ireland and Greece.

[EvilEdna]

"Does the ECB understand the concept of contagion?” asked Jacques Cailloux, chief Europe economist at RBS

He would say that wouldn't he as they're the bank with the most significant exposure to the Irish property market. I can see why RBS should be worried but not why Ireland's problems alone are enough to bring down the EU card house.

[Bloo Loo]

"Does the ECB understand the concept of contagion?" asked Jacques Cailloux, chief Europe economist at RBS

He would say that wouldn't he as they're the bank with the most significant exposure to the Irish property market. I can see why RBS should be worried but not why Ireland's problems alone are enough to bring down the EU card house.

he's not worried about contagion.

He's worried about his next paycheck.

[aa3]

"Does the ECB understand the concept of contagion?” asked Jacques Cailloux, chief Europe economist at RBS

He would say that wouldn't he as they're the bank with the most significant exposure to the Irish property market. I can see why RBS should be worried but not why Ireland's problems alone are enough to bring down the EU card house.

Good point. In the article it said Ireland will most likely need 80-90 billion euros shortly.. wll that is a lot for those taking the losses.. but for the EU as a whole and the ECB in particular that is no big deal. It could easily print 80 billion euros and no one would even know.

Even monetizing everything for Portugal, Greece and Ireland is no big deal. To give an analogy its like whether the US can bail out California. There is no doubt with ease they could, heck one month's QE now would pay California's budget for a whole year.

[interestrateripoff]

he's not worried about contagion.

He's worried about his next paycheck.

Yep, give my bank free money for the toxic crap we bought.

Although no surprise this is a AEP article.

I thought he was all against the magic printing press now? Or is that just against the FED magic printing press?

[OnlyMe]

The banking system is a piss-take. You keep on giving money to crooks and whole economies are going to fall apart anyway.

Ireland mull asking for money for banks, not state: report

http://www.reuters.com/article/idUSTRE6AC1JP20101115

"We have to find out - could you go to the fund and get money for the banking sector. Lenihan at ECOFIN presents an opportunity to discuss it. It would be the banks that would have to pay it back - not the state." The total amount of outstanding European Central Bank loans owed by Irish banks rose to 130 billion euros as of Oct 29 from 119 billion on September 24, data published on the Irish central bank's website showed on Friday.

Edited November 15, 2010 by OnlyMe

[EvilEdna]

Good point. In the article it said Ireland will most likely need 80-90 billion euros shortly.. wll that is a lot for those taking the losses.. but for the EU as a whole and the ECB in particular that is no big deal. It could easily print 80 billion euros and no one would even know.

Even monetizing everything for Portugal, Greece and Ireland is no big deal. To give an analogy its like whether the US can bail out California. There is no doubt with ease they could, heck one month's QE now would pay California's budget for a whole year.

Quite. When/if Spain starts to squeal is when things will get really interesting. IMHO.

[Bloo Loo]

Good point. In the article it said Ireland will most likely need 80-90 billion euros shortly.. wll that is a lot for those taking the losses.. but for the EU as a whole and the ECB in particular that is no big deal. It could easily print 80 billion euros and no one would even know.

Even monetizing everything for Portugal, Greece and Ireland is no big deal. To give an analogy its like whether the US can bail out California. There is no doubt with ease they could, heck one month's QE now would pay California's budget for a whole year.

yeah, on top of the 300bn they have already done, the extended lines of credit to banks exposed to eastern europe, the bonds they have bought from Greece, then Portugal, then Spain, then France, then Italy, and finally Germany.

its all a lot of nothing.

course, they could have Ireland FAIL to pay a few bankers.

they could AVOID, devaluation via printing.

they could PUNISH poor investments.

they could force the BANKRUPT to be ...bankrupt.

[madpenguin]

Yep, give my bank free money for the toxic crap we bought.

Although no surprise this is a AEP article.

I thought he was all against the magic printing press now? Or is that just against the FED magic printing press?

I must admit I am getting pretty fed up with AEP's column, I see the continual Euro bashing as a way to divert attention from the dollar and Sterling's weakness, yes Europe has problems but nowhere near as acute as those facing the UK/US (monetarily we seem to ape every financial scheme the US dreams up so I tend to think of both countries as being in the same camp)

While living in Germany the one thing that came through loud and clear was that everyone feared the return of the hyperinflation of the 1930's, it seems to be a very strong folk memory, more of a scar even than the war and breakup. When the US and UK started QE and voiced surprise at Angela Merkels resistance I laughed out loud, if you speak to any German, asking them to inflate the economy is like asking them to put their hand in a meat grinder!

I know some people (particularly AEP's followers) get very excited about the thought of the Euro failing and breaking up, however few stop to think that the collapse of our largest trading partner would pretty much push the UK into the abyss financially (I mean even more than it is already).

I have had the opportunity to talk with people at work from Greece, Italy and Spain about the crisis and the possibility of withdrawing from the euro and the overwhelming response I get is "are you f@#%$*%! crazy you think we'd ever want the drachma/lira/peseta back?".

Even with the German's I was out with a German friend one day and he was converting the price of something from Euro's to deutchemarks, when I asked why (thinking aha they do want the DM back) he said "a lot of German's do it, we grew up with the deutchemark so we convert back to it to check we're not being ripped off!" (a bit like a lot of people in the UK did with pounds shillings and pence for a while after decimilisation).

Edited November 15, 2010 by madpenguin

[stormymonday_2011]

I must admit I am getting pretty fed up with AEP's column, I see the continual Euro bashing as a way to divert attention from the dollar and Sterling's weakness, yes Europe has problems but nowhere near as acute as those facing the UK/US (monetarily we seem to ape every financial scheme the US dreams up so I tend to think of both countries as being in the same camp)

While living in Germany the one thing that came through loud and clear was that everyone feared the return of the hyperinflation of the 1930's, it seems to be a very strong folk memory, more of a scar than the war and breakup. When the US and UK started QE and voiced surprise at Angela Merkels resistance I laughed out loud, if you speak to any German, asking them to inflate the economy is like asking them to put their hand in a meat grinder!

I know some people (particularly AEP's followers) get very excited about the thought of the Euro failing and breaking up, however few stop to think that the collapse of our largest trading partner would pretty much push the UK into the abyss financially (I mean even more than it is already).

I have had the opportunity to talk with people at work from Greece, Italy and Spain about the crisis and the possibility of withdrawing from the euro and the overwhelming response I get is "are you f@#%$*%! crazy you think we'd ever want the drachma/lira/peseta back?".

Even with the German's I was out with a German friend one day and he was converting the price of something from Euro's to deutchemarks, when I asked why (thinking aha they do want the DM back) he said "a lot of German's do it, we grew up with the deutchemark so we convert back to it to check we're not being ripped off!" (a bit like a lot of people in the UK did with pounds shillings and pence for a while after decimilisation).

I agree that the UK and the US are inevitably screwed as a result of the financial crisis. However, it does not necessarily follow that the Eurozone has got the response right . It is true that the Germans are resistant to inflation as a cure to the financial crisis but they still show no sign of enforcing the massive debt write downs and bond to equity swaps which are required to stabilise the financial system. One of the major reasons for this reluctance is that when it came to irresponsible lending European banks were every much as crazy as their British and US counterparts ( the exposure of French banks to Italian debt is simply jaw dropping). Frau Merkel is just a keen to unload these liabilities on the European taxpayer as the US and British governments are to dump bank debt on their own populations. This is why she is is so keen for Ireland to make use of the taxpayer backed ESFS. It is a disguised bailout of German and French, and dare I say it, UK banks which would be diificult to sell directly but might get sold as part of a European wide rescue package. All the Irish, Greeks, Portuguese etc are getting in return is getting in return is debt bondage, deflation, shrinking GDP and austerity with no end in sight.

The proposals currently being put to the Irelands government also means a virtual surrender of Irish sovereignty to Brussels essentially putting the country in a position of dependence on foreign rulers as it was when the British were in charge. Now it is quite possible to argue that reducing the Irish governments budgetary discretion to those of and English county might fix one of the main domestic causes of Irelands crack up boom and bust, its notoriously insular and self seeking political class. Nonetheless, undoing the work of Michael Collins and Eamon De Valera might be a step too far for some in Ireland. It is no surprise that Sinn Feins political leadership are switching so much of their attention from Ulster to the upcoming elections in the Republic as they see it as the opportunity of a lifetime to fulfil their political agenda.

Edited November 15, 2010 by realcrookswearsuits

[Bloo Loo]

I agree that the UK and the US are inevitably screwed as a result of the financial crisis. However, it does not necessarily follow that the Eurozone has got the response right . It is true that the Germans are resistant to inflation as a cure to the financial crisis but they still show no sign of enforcing the massive debt write downs and bond to equity swaps which are required to stabilise the financial system. One of the major reasons for this reluctance is that when it came to irresponsible lending European banks were every much as crazy as their British and US counterparts ( the exposure of French banks to Italian debt is simply jaw dropping). Frau Merkel is just a keen to unload these liabilities on the European taxpayer as the US and British governments are to dump bank debt on their own populations. This is why she is is so keen for Ireland to make use of the taxpayer backed ESFS. It is a disguised bailout of German and French, and dare I say it, UK banks which would be diificult to sell directly but might get sold as part of a European wide rescue package. All the Irish, Greeks, Portuguese etc are getting in return is getting in return is debt bondage, deflation, shrinking GDP and austerity with no end in sight.

The proposals currently being put to the Irelands government also means a virtual surrender of Irish sovereignty to Brussels essentially putting the country in a position of dependence on foreign rulers as it was when the British were in charge. Now it is quite possible to argue that reducing the Irish governments budgetary discretion to those of and English county might fix one of the main domestic causes of Irelands crack up boom and bust, its notoriously insular and self seeking political class. Nonetheless, undoing the work of Michael Collins and Eamon De Valera might be a step too far for some in Ireland. It is no surprise that Sinn Feins political leadership are switching so much of their attention from Ulster to the upcoming elections in the Republic as they see it as the opportunity of a lifetime to fulfil their political agenda.

the financial system is and will remain unstable while it contains massively insolvent banks.

Overspending for Governments is not an economic crisis...it is a lack of prudence....the cure for this is to cut spending. But, they can point to the financial system being unstable as to why they carry on, addressing neither problem and making it all worse.

[madpenguin]

I agree that the UK and the US are inevitably screwed as a result of the financial crisis. However, it does not necessarily follow that the Eurozone has got the response right . It is true that the Germans are resistant to inflation as a cure to the financial crisis but they still show no sign of enforcing the massive debt write downs and bond to equity swaps which are required to stabilise the financial system. One of the major reasons for this reluctance is that when it came to irresponsible lending European banks were every much as crazy as their British and US counterparts ( the exposure of French banks to Italian debt is simply jaw dropping). Frau Merkel is just a keen to unload these liabilities on the European taxpayer as the US and British governments are to dump bank debt on their own populations. This is why she is is so keen for Ireland to make use of the taxpayer backed ESFS. It is a disguised bailout of German and French, and dare I say it, UK banks which would be diificult to sell directly but might get sold as part of a European wide rescue package. All the Irish, Greeks, Portuguese etc are getting in return is getting in return is debt bondage, deflation, shrinking GDP and austerity with no end in sight.

The proposals currently being put to the Irelands government also means a virtual surrender of Irish sovereignty to Brussels essentially putting the country in a position of dependence on foreign rulers as it was when the British were in charge. Now it is quite possible to argue that reducing the Irish governments budgetary discretion to those of and English county might fix one of the main domestic causes of Irelands crack up boom and bust, its notoriously insular and self seeking political class. Nonetheless, undoing the work of Michael Collins and Eamon De Valera might be a step too far for some in Ireland. It is no surprise that Sinn Feins political leadership are switching so much of their attention from Ulster to the upcoming elections in the Republic as they see it as the opportunity of a lifetime to fulfil their political agenda.

Whichever way anyone jumps, choosing between austerity whether enforced by another another or not, and high inflation seems a pretty poor choice.

You can moan about control by Brussels, but it could equally be control by the IMF, again not much comfort there!, just a US spin on the same problem, at least Brussels has a vested interest in Ireland's economy not failing.

Edited November 15, 2010 by madpenguin

[madpenguin]

One of the posters on a Guardian thread posted this link:

http://golemxiv-credo.blogspot.com/2010/10/who-are-bond-holders-we-are-bailing-out.html

"SO.... on one side we have Ireland whose bond holders, its people, have between them a total GDP wealth of 0.207 trillion euros. Who are being FORCED, against their will, to pay Anglo Irish bank's debts to its bond holders, who between them hold 20.8 Trillion euros. The people of Ireland are paying to, and protecting the wealth and power of, people who have 100 times more wealth!

So where do these wealthy bond holders live and work?

Germany has the most with 15 of the bond holders. Who between them hold 5.3 trillion euros.

France is next with 10 bond holders. Who have about 4 trillion to keep them warm.

Britain is third with 9 who have around 3 trillion.

The Swiss have 6 but who have about 8.5 trillion.

America has only three and hold only a trillion.

Other nations include, Spain, Belgium, Portugal, Holland Finland, Norway, Sweden, Poland, South Africa and Italy.

All these figures are very rough. The figure for Switzerland is certainly under because Private Swiss banks just don't publish figures. What we can say for sure, figures or no figures, is these are not banks investing widow's pensions or orphan's pennies."

If these sorts of figures are true it shows why the UK has jumped in with cash so quickly.

So much for Switzerland's financial prudence , yeah ok I know, investing on behalf of customers,it's just so rare you can take a pop at them couldn't resist!

Edited November 15, 2010 by madpenguin

[leicestersq]

I must admit I am getting pretty fed up with AEP's column, I see the continual Euro bashing as a way to divert attention from the dollar and Sterling's weakness, yes Europe has problems but nowhere near as acute as those facing the UK/US (monetarily we seem to ape every financial scheme the US dreams up so I tend to think of both countries as being in the same camp)

While living in Germany the one thing that came through loud and clear was that everyone feared the return of the hyperinflation of the 1930's, it seems to be a very strong folk memory, more of a scar even than the war and breakup. When the US and UK started QE and voiced surprise at Angela Merkels resistance I laughed out loud, if you speak to any German, asking them to inflate the economy is like asking them to put their hand in a meat grinder!

I know some people (particularly AEP's followers) get very excited about the thought of the Euro failing and breaking up, however few stop to think that the collapse of our largest trading partner would pretty much push the UK into the abyss financially (I mean even more than it is already).

I have had the opportunity to talk with people at work from Greece, Italy and Spain about the crisis and the possibility of withdrawing from the euro and the overwhelming response I get is "are you f@#%$*%! crazy you think we'd ever want the drachma/lira/peseta back?".

Even with the German's I was out with a German friend one day and he was converting the price of something from Euro's to deutchemarks, when I asked why (thinking aha they do want the DM back) he said "a lot of German's do it, we grew up with the deutchemark so we convert back to it to check we're not being ripped off!" (a bit like a lot of people in the UK did with pounds shillings and pence for a while after decimilisation).

yes Europe has problems but nowhere near as acute as those facing the UK/US - I beg to differ. Their problems are even worse than ours. They have worse demographics, and a currency that they cannot control, I wouldnt like to be in that stew.

While living in Germany the one thing that came through loud and clear was that everyone feared the return of the hyperinflation of the 1930's - It clearly wasnt that loud and clear given that Germany experienced hyper-inflation in the 1920's.

if you speak to any German, asking them to inflate the economy is like asking them to put their hand in a meat grinder! - If you order them to do this rather than just ask, they will get on with it.

I know some people (particularly AEP's followers) get very excited about the thought of the Euro failing and breaking up, however few stop to think that the collapse of our largest trading partner would pretty much push the UK into the abyss financially (I mean even more than it is already). - I am coming to the conclusion that the sooner we get ourselves to that abyss, the better. At the moment we have an out of control socialist/parasitic system, that rewards either the very rich, who can dodge taxes, those at the top of the public sector, who award themselves big salaries, pensions and if need be, payoffs, and those deemed to be 'in need', at the expense of everyone else. The quicker that the state collapses as a result of this idiocy, the better. Only a collapse will allow us to build a system that primarily rewards 'contribution'.

I have had the opportunity to talk with people at work from Greece, Italy and Spain about the crisis and the possibility of withdrawing from the euro and the overwhelming response I get is "are you f@#%$*%! crazy you think we'd ever want the drachma/lira/peseta back?". - I am not surprised that they want the Euro. It has allowed them to earn more in real terms than their production would allow, the balance has come from borrowing off of others. If they really want their beloved Euro's, then let us see how they knuckle down and pay back what they owe.

Even with the German's I was out with a German friend one day and he was converting the price of something from Euro's to deutchemarks, when I asked why (thinking aha they do want the DM back) he said "a lot of German's do it, we grew up with the deutchemark so we convert back to it to check we're not being ripped off!" (a bit like a lot of people in the UK did with pounds shillings and pence for a while after decimilisation). - Perhaps your German friend ought to check the bonds that back his savings in the bank. Backed by the promises of the PIGS to work hard and repay what they borrowed from his bank. Chances of them knuckling down and doing that?

What a wonderful game it all is. I still cant see the Euro surviving, but I guess that it allowed a lot of southern Europeans and Ireland to defraud a lot of hard working people out of their cash. Just how much has been lost will become clear once the bezzle turns into the embezzled.

Edited November 15, 2010 by leicestersq

[Bloo Loo]

One of the posters on a Guardian thread posted this link:

http://golemxiv-cred...ailing-out.html

"SO.... on one side we have Ireland whose bond holders, its people, have between them a total GDP wealth of 0.207 trillion euros. Who are being FORCED, against their will, to pay Anglo Irish bank's debts to its bond holders, who between them hold 20.8 Trillion euros. The people of Ireland are paying to, and protecting the wealth and power of, people who have 100 times more wealth!

So where do these wealthy bond holders live and work?

Germany has the most with 15 of the bond holders. Who between them hold 5.3 trillion euros.

France is next with 10 bond holders. Who have about 4 trillion to keep them warm.

Britain is third with 9 who have around 3 trillion.

The Swiss have 6 but who have about 8.5 trillion.

America has only three and hold only a trillion.

Other nations include, Spain, Belgium, Portugal, Holland Finland, Norway, Sweden, Poland, South Africa and Italy.

All these figures are very rough. The figure for Switzerland is certainly under because Private Swiss banks just don't publish figures. What we can say for sure, figures or no figures, is these are not banks investing widow's pensions or orphan's pennies."

If these sorts of figures are true it shows why the UK has jumped in with cash so quickly.

So much for Switzerland's financial prudence , yeah ok I know, investing on behalf of customers,it's just so rare you can take a pop at them couldn't resist!

nonsense, Uk banks on Doomberg minutes ago confirming they have "very low exposure" to Ireland.

I bet if you asked all the banks, I bet the exposure is £8.50 in total.

Liars, the lot of them.

and what of the people Ireland LENT to....dont here from them.

[madpenguin]

nonsense, Uk banks on Doomberg minutes ago confirming they have "very low exposure" to Ireland.

I bet if you asked all the banks, I bet the exposure is £8.50 in total.

Liars, the lot of them.

and what of the people Ireland LENT to....dont here from them.

Do you mean this report on Bloomberg?

http://www.bloomberg.com/news/2010-11-12/pound-declines-against-the-dollar-on-g-20-talks-u-k-consumer-confidence.html

Pound Declines Amid Concern Over Banking Contagion From Irish Debt Crisis

“The U.K. is number one in terms of Irish exposure, so there definitely is a risk there,” said Derek Halpenny, head of European currency strategy at Bank of Tokyo-Mitsubishi UFJ in London. “The greatest concern must be that we haven’t really hit bottom yet.”

It's ok I can step in and pay the £8.50 if required

If he's not talking about banks then what? bonds?, and who own's them?

Edited November 15, 2010 by madpenguin

[Bloo Loo]

Do you mean this report on Bloomberg?

http://www.bloomberg...confidence.html

Pound Declines Amid Concern Over Banking Contagion From Irish Debt Crisis

"The U.K. is number one in terms of Irish exposure, so there definitely is a risk there," said Derek Halpenny, head of European currency strategy at Bank of Tokyo-Mitsubishi UFJ in London. "The greatest concern must be that we haven't really hit bottom yet."

It's ok I can step in and pay the £8.50 if required

If he's not talking about banks then what? bonds?

It was the reporter talking about Lloyds and RBS.

she is just reporting that there is lack of retail sales due to lack of dollars..

I think she is encouraging QE as there is a money shortage over there. Me, I think its a wages shortage and too much debt...but what do I know?

[madpenguin]

It was the reporter talking about Lloyds and RBS.

she is just reporting that there is lack of retail sales due to lack of dollars..

I think she is encouraging QE as there is a money shortage over there. Me, I think its a wages shortage and too much debt...but what do I know?

This published today by Telegraph:

Ireland debt crisis: European banks' exposure

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8133669/Ireland-debt-crisis-European-banks-exposure.html

The table is based on data supplied to regulators under a stress test conducted in July. It is the net exposure of banks to central and local government debt at the end of March in euros, based on current exchange rates.

BANK NET EXPOSURE (NET OF IMPAIRMENTS)

Hypo Real Estate* €10,3bn

Royal Bank of Scotland €5bn (£4.2bn)

Allied Irish Bank €4,2bn

Bank of Ireland €1,2bn

Credit Agricole €929bn

Danske Bank €655m

HSBC €593m

BNP Paribas €571m

Group BPCE €491m

Societe Generale €453m

KBC Group €446 mln**

* Nationalised HRE said since assets have been transferred to a German government-backed "bad bank", its exposure to Ireland has been reduced to a negligible amount, according to a presentation of Oct. 5.

Edited November 15, 2010 by madpenguin

[madpenguin]

Me, I think its a wages shortage and too much debt...but what do I know?

Probably more than them, likely to be less self interest!