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R K

Stand By For Euro Crisis 2

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Road catches up with can (again)

In sum:

*Greek debt always was & remains unpayable

* Italian banks are even more f&cked

* Portugal & Spain rejecting failed German austerity

* IMF losing patience

* Schauble rapidly losing control

* Brexit vote looming

http://www.bbc.co.uk/news/world-europe-36090188

Just as the migration crisis eases, Berlin and Paris brace themselves for another blow - the possibility of the UK leaving the EU.

The Ukraine crisis is almost forgotten, but those Dutch who could be bothered to vote have rejected an ever-growing union.

So it is hardly the best time for an old horror to remerge - Euro Crisis 2.

But that is what is on the cards.

Mutterings from Portugal, news from Spain, Italian woes and Greeks refusing to bear gifts to Berlin all point towards a difficult summer.

Like the final shot of a horror movie, a creepy hand thrust up from the ground, there is new evidence the monster never died.

Of course, we all knew the euro crisis was never solved, merely shelved.

But German-driven austerity is becoming more irksome to governments elected to oppose it, and the European Central Bank (ECB) is taking notice, to the dismay of politicians in Europe's biggest economy.

North-south divide

At a recent conference of academics, investors and policy makers I was struck that just about everyone agreed the state of the euro was a critical problem and the European economy was in deep trouble.

Nearly everyone agreed the euro was unsustainable without big changes. That is where the unity ended. Everyone had different solutions, none of them, to my mind, very politically palatable.

Edited by R K

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Yet another crisis which will just keep "threatening" or "looming" without ever actually materialising into any tangible event.

If you've got to give our current political leaders credit for anything their ability to paper over cracks and sweep under carpets must be unrivalled in human history.

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what has a systemic banking crisis got to do with being in or out of the EU. WHEN the next financial crisis hits, the entire world will go down, you can be in the EU , out the EU, or on a South Pacific island, you're going down.

can you spell $700 trillion outstanding derivative debt with a global GDP of $50 trillion(in good times)

BREXIT is a sideshow.

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Yet another crisis which will just keep "threatening" or "looming" without ever actually materialising into any tangible event.

If you've got to give our current political leaders credit for anything their ability to paper over cracks and sweep under carpets must be unrivalled in human history.

Yep - just costing us £10Bn a month to keep the pretence up. Oh, and doubling the national debt under an "austere" Tory government no-less - who now depend on importing net-millions of Eastern Europeans to prop up the GDP. Yeah, no tangible events occurring - except a hollowing out of any kind of decent future for the younger generations.

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what has a systemic banking crisis got to do with being in or out of the EU. WHEN the next financial crisis hits, the entire world will go down, you can be in the EU , out the EU, or on a South Pacific island, you're going down.

can you spell $700 trillion outstanding derivative debt with a global GDP of $50 trillion(in good times)

BREXIT is a sideshow.

The world will keep spinning...

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If anything were to tempt me to vote BREXIT - it would be this. The Eurozone is a ticking timebomb and when it (eventually) goes off, we will be dragged down with it

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The world will keep spinning...

Sure. It kept spinning when the Venice Ponzi collapse in the 1340's. It just took 100 years , and the dark ages and losing half of europe's population, to recover. Some may have wished that the earth stopped spinning then. :) This one is global.

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Sure. It kept spinning when the Venice Ponzi collapse in the 1340's. It just took 100 years , and the dark ages and losing half of europe's population, to recover. Some may have wished that the earth stopped spinning then. :) This one is global.

A cull of a few hundred banker glitterati would be enough to solve it all!

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From the FT re the insolvency of Italian Banks and the setting up of a pathetically small fund to buy up shares of insolvent banks and bad debts at book price.....(note there is £360bn of bad debts much of which will NEVER be recovered as they go back as far as the 1960's.

"European Commission".....THAT MEANS US!!

The Italians for years relied on high inflation and a devaluing Lira to hide its bad debts. The actually 'true' value of all the bad debts as a % of lending is staggeringly high without that strategy. If they get bailed by the likes of us, what is to change their behaviour?

Counter factual would be what happens if they dont.

Problem for Italy is germany (ok, "state aid" rules but same thing) wont allow him to write down these debts. Same issue as greece in effect.

At some point Schauble runs out of rope. Euro is a (more or less) static dis-equilibrium. They always blow up eventually.

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If anything were to tempt me to vote BREXIT - it would be this. The Eurozone is a ticking timebomb and when it (eventually) goes off, we will be dragged down with it

My thinking has long been that it is going to pop, with or without us. We might as well exit before we get caught in the end game IMO.

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Banks will be a big topic of discussion on Friday and Saturday at a informal meeting of Finance Ministers in Amsterdam.

Topics addressed will include the completion of banking union and the creation of a joint system of deposit insurance.

Some nations, like Germany, don’t want to guarantee bank deposits of other nations if they don’t, in exchange, receive any reduction in credit risk. One of the possibilities is to introduce limits on how much public debt a financial institutional can hold

The Italian government and the European Commission are working closely on a joint solution to develop a new framework for the Italian banking sector.

Yesterday in Brussels, the European Commissioner for Competition, Margrethe Vestager, was said to have been upbeat on the outcome of negotiations, at time when the 28 EU members are having heated discussions on finalizing banking union and possible ceilings on the public debt holding of credit institutions.

Asked about the new Atlante fund, created to help banks in crisis, Vestager said, “I don’t think the Italian government is making the choices it’s making to avoid state aid, or rules regarding state aid. I think it’s trying to find the best way for the Italian banking sector to move forward. Atlante was launched as a private fund. If there are reasons for the state to intervene, they will tell us.”

The fund will be financed by insurance companies, bank foundations and credit institutions. A public entity, state bank Cassa Depositi e Prestiti, will come in with €500 million.

“We are in close contact with the Economy Ministry,” said an EC representative. “For now, there’s nothing new to comment on.”

European Community rules call for a special analysis by the EU Commission not just in cases where public funds are involved but also when the use of private capital is imposed by a national government. Once it’s been determined that the Atlante fund is financed by private interests, it’s important for EU authorities to ascertain that the collaboration is completely voluntary in order to avoid market distortions.

http://www.italy24.ilsole24ore.com/art/markets/2016-04-20/vestager-banche-134403.php?uuid=ACdJwTBD&cmpid=nlqii

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Road catches up with can (again)

In sum:

*Greek debt always was & remains unpayable

* Italian banks are even more f&cked

* Portugal & Spain rejecting failed German austerity

* IMF losing patience

* Schauble rapidly losing control

* Brexit vote looming

http://www.bbc.co.uk/news/world-europe-36090188

"Just as the migration crisis eases...."

Thought it was getting worse :wacko:

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Sure. It kept spinning when the Venice Ponzi collapse in the 1340's. It just took 100 years , and the dark ages and losing half of europe's population, to recover. Some may have wished that the earth stopped spinning then. :) This one is global.

Interesting point is that most people do not understand how the UK has become, in the last 20 years, the poster child for just in time deliveries to shops, including food shops. Banks crash - suppliers cannot borrow/obtain LCs/settle debts - food deliveries begin to slow - demand outstrips supply - panic buying empty shelves in cities in 2 days - riots in London and most other cities within 5 days.

It'll be interesting to watch.....from a distance.

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Will there EVER be a time after 23rd June when we vote to stay in the EU.....that we will ever say "phew! thank GOODNESS we stayed in the EU!"? Nah, I don't see that day ever coming.

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