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Euro Bailout - An Animated Explanation

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Slightly tongue in cheek animation but it does seem to put things into perspective:

Putting (unsustainable) limb eating aside, the only way I can see out of this mess is to fire up the printing presses and let rabid inflation do the rest.

Edit, found this interesting observation in the comments section:

Generally a good little video. But.

The banks have not yet agreed to a 50% haircut. The banks had one representative, Charles Dallara, at the talks who told Sarkozy that he agreed the banks should agree to the haircut. His decision is not binding and he has no power to enforce banks to accept the 50%, even if he did the whole premise is that the banks must agree voluntarily. It must be voluntary to prevent the CDS's (insurance on the debt) for coming into effect, CDS's pay out when there is a default, it is likely that the CDS's on Greek debt are worth more than the debt itself so therefore would cause greater turmoil in the market, as those on the losing end of the CDS trade would have to payout.

The banks have taken out the CDS "insurance" to protect themselves from losses on a default, so why would they agree to a 50% loss when they have already insured themselves against it, the CDS would pay them out the full value of whatever loan they have made to Greece. This deal relies on the banks perceiving that the 50% writedown is for the greater good, but banks have no obligation to the greater good they have an obligation to shareholders to maximise profit. Therefore it is logical for each bank to protect itself from losses, not agree to haircut and instead enact its CDS's to collect the value of the bad loan made, which in turn would lead to the credit event, which Europes leaders are desperate to avoid.

Edited by Bootsox

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Fun video, poted to Facebook to try and get my friends a little more interested in the world arround them (I dont hold out much hope).

As a note on the CDS payouts, I agree with what you are saying but if the fall out from a credit event is worse than the money they would lose by not taking the CDS route then a can see how it may work. Also the losses on a 50% cut are c £100bn and there was a £100bn recap fund so in reality there may be (once again) no real nett loss over the medium term

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But the point I keep raising is .... What if you are a us hedge fund who has jointers up a few billion of Greek debt at 50 cents on the dollar recently ( that's where it traded).

What is stopping you or incentivising you from demanding 100 cents on the dollar if the obligation falls due in the next couple of years?

Answers please as I can not find one.

I can see screws being put on European banks and sweeteners for them but these do not apply to other private persons such as hedge funds do they?

Until i get a single person to riddle me this them I am under the impression that a very very very large cheque may just have been written by European taxpayers to private interests just to avoid the d word .

I have tried to contact ukip about my suspicions as if uk banks do not demand full payment them we are bailing out the politicos again. Forget the contagion argument, this deal already allows for the effects of a default to be felt as everyone is getting what they would get in a default ( remember CDs would be zero sum game) this is a cosmetic fix to save face .

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From the guardian link's comments section.

The new eu.

No wonder Blair wanted the EU job. No need to bother about lying or shredding anything. Impunity and immunity.

These recent developments are indeed ominous.

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From the guardian link's comments section.

The new eu.

Is that for real, I can't find a copy of the treaty as I want to see if the crazy things that have pointed out actually exist?????

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http://globaleconomicanalysis.blogspot.com/2011/10/treaty-of-debt-eye-opening-video-on-esm.html

Key Details of ESM Accord

•Article 8 says "Authorized Capital stock 700 billion Euros"

•Article 9 says "ESM members irrevocably and unconditionally undertake to pay capital calls on them within 7 days"

•Article 10 allows the ESM board of governors to "change the authorized capital and amend article 8 accordingly"

•Article 27 says ESM shall enjoy "immunity from every form of judicial process". Thus the ESM can sue member countries but no one can challenge it. No governments, parliament or any other body or laws apply to the ESM or its organization.

•Article 30 says "Governors, alternate governors, directors, alternate directors, the managing director and staff shall be immune from legal process with respect to acts performed by them (...) and shall enjoy inviolability in respect of their official papers and documents"

There are no independent reviewers and no existing laws apply. Thus Europe's national budgets will be in the hands of one single, unelected body that is accountable to no one and immune from all legal actions.

Is this the future of the EU or will the German supreme court and other governments put an end to it?

Edited by billybong

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Thanks, but I'm looking for the raw document as I don't realy want some extracts with VI spin. If I read it myself then I'm happy to take it up with my MP.

Edited by FIGGY

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We are not signing up though are we?

Not sure, all the details seem very sketchy and I don't want to leave anytning to chance like someone waving through some changes

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Thanks, but I'm looking for the raw document as I don't realy want some extracts with VI spin. If I read it myself then I'm happy to take it up with my MP.

Here

www.consilium.europa.eu/media/1216793/esm%20treaty%20en.pdf

p-o-p

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  • 276 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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