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THE Eurozone Economics Thread pt 2 (merged)

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THE Eurozone Economics Thread pt 2 (merged)

Unread postby EnergyUnlimited » Tue 19 Jun 2012, 05:55:08

Daniel_Plainview wrote:This is the new era we are entering. Any systemically important entity (whether a country, bank, or corporation) will be in a position to extract massive bailouts with increasingly lax concessions.

There are limits to such strategy, but I agree that it will be about the only show in town for a while... until entire 1st world socio-economic system goes down the drain.
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Re: THE Eurozone Economics Thread (merged)

Unread postby EnergyUnlimited » Tue 19 Jun 2012, 08:40:33

Ambrose Evans Pritchard:
Meanwhile, the same happens in Spain, where the government is forced to borrow money (at nearly 7%) it can hardly raise in order to shore up banks that are borrowing from the ECB (at 1%) to lend to the Spanish government (at 7%) so that the latter can… bail them out. Not even the sickest of minds could make this up!"

Looks like nice European deal.

Here are details:
http://blogs.telegraph.co.uk/finance/am ... bloc-wins/
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Re: THE Eurozone Economics Thread (merged)

Unread postby eXpat » Tue 19 Jun 2012, 12:52:31

Worring, considering that they are paying all the EU party...
German Investor Confidence Collapses
This is an ugly number coming out of Europe's largest economy. The ZEW June investor expectations index plummeted to -16.9 in June, This is down substantially from 10.8 in May.

Economists were expecting the figure to fall to 2.3 in June. DJ FX Trader notes that this was the biggest plunge since October 1998.

Read more: Business Insider
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Re: THE Eurozone Economics Thread (merged)

Unread postby Quinny » Tue 19 Jun 2012, 15:13:13

Osborne plans £100bn cash injection/QE to british economy. It's supposed to go to the banks on condition they provide loans to small businesses and individuals.
FT

I don't think this has been widely reported or even mentioned here.

Interesting that two days later we get 'Spanish collapse could cost British Banks £100bn'
Telegraph

Makes you wonder whether the 'pre-announcement' was just to sugar the pill of 'loaning' money to the 'bankers' to avoid the unpopular 'bailout' label.
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Re: THE Eurozone Economics Thread (merged)

Unread postby kublikhan » Tue 19 Jun 2012, 16:55:19

dolanbaker wrote:We only need inflation to support an economic model dependent on growth and/or inflation to function.
But that is the economic model we are currently using. you would need to change a hell of alot more in our economic model than fraction reserve banking rules to make it function without growth.
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Re: THE Eurozone Economics Thread (merged)

Unread postby kublikhan » Tue 19 Jun 2012, 17:04:19

The EU has just voted to scrap the use of ratings agencies in the next step on the road to a ban of all policy criticism. Via Bloomberg,

•EU LAWMAKERS APPROVE AMENDMENT TO END USE OF CREDIT RATINGS
It seems just a few years ago, when these very same ratings agencies were raising ratings and supporting banking systems, mortgage provision, and sovereign-inclusions-into-monetary-unions, that the political elite could not showing off their bronzed statues of AAA/AA-ness.
And in the most bizarre of twists, they would prefer if they were allowed to rate themselves:
•LAWMAKERS CALL FOR EU TO ISSUE SOVEREIGN CREDIT RATINGS
- Bloomberg via Zerohedge

Such is the ways of children. When they don't want to play by the rules anymore, it is just a matter of taking their ball and going home.
EU seeks to end criticism by banning ratings agencies

Yes of course they should rate their own debt, rate it all AAA+++!!! That would solve all of these pesky debt problems. /sarcasm
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Re: THE Eurozone Economics Thread (merged)

Unread postby dolanbaker » Tue 19 Jun 2012, 17:17:10

kublikhan wrote:
dolanbaker wrote:We only need inflation to support an economic model dependent on growth and/or inflation to function.
But that is the economic model we are currently using. you would need to change a hell of alot more in our economic model than fraction reserve banking rules to make it function without growth.

I agree, that's why I said the state should issue the money based on some limiting factor like population or for example or in a more extreme form by land area under agriculture.

It puts a limit on growth, before nature imposes a more severe one.
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Re: THE Eurozone Economics Thread (merged)

Unread postby EnergyUnlimited » Wed 20 Jun 2012, 03:08:09

Quinny wrote:Osborne plans £100bn cash injection/QE to british economy. It's supposed to go to the banks on condition they provide loans to small businesses and individuals.

Would there be much demand for these without 0% APR fixed rate on offer?

I bet, a lot of Brits already have learned a hard way that excessive debt is not a good idea...
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Re: THE Eurozone Economics Thread (merged)

Unread postby argyle » Wed 20 Jun 2012, 03:19:17

kublikhan wrote:
The EU has just voted to scrap the use of ratings agencies in the next step on the road to a ban of all policy criticism. Via Bloomberg,

•EU LAWMAKERS APPROVE AMENDMENT TO END USE OF CREDIT RATINGS
It seems just a few years ago, when these very same ratings agencies were raising ratings and supporting banking systems, mortgage provision, and sovereign-inclusions-into-monetary-unions, that the political elite could not showing off their bronzed statues of AAA/AA-ness.
And in the most bizarre of twists, they would prefer if they were allowed to rate themselves:
•LAWMAKERS CALL FOR EU TO ISSUE SOVEREIGN CREDIT RATINGS
- Bloomberg via Zerohedge

Such is the ways of children. When they don't want to play by the rules anymore, it is just a matter of taking their ball and going home.
EU seeks to end criticism by banning ratings agencies

Yes of course they should rate their own debt, rate it all AAA+++!!! That would solve all of these pesky debt problems. /sarcasm


on the other hand.. it might have prevented the current financial crisis if they hadn't listend.. Their track record is very poor.. (this and previous crisis's) I can't believe ppl are actually still listening to them instead of dumping them (both in EU, US and abroad)
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Re: THE Eurozone Economics Thread (merged)

Unread postby smiley » Wed 20 Jun 2012, 18:43:48

Yes of course they should rate their own debt, rate it all AAA+++!!! That would solve all of these pesky debt problems. /sarcasm


To be fair it is perhaps good to read the original article by Bloomberg. These last two words in the title make quite a bit of difference.

EU Lawmakers Seek To Scrap Credit-Ratings Rotation Plan

European Union lawmakers voted to scrap most of a proposal to force businesses to rotate the credit-ratings company they hire to assess their debt, while backing tighter restrictions on sovereign-debt ratings.

http://www.bloomberg.com/news/2012-06-1 ... tings.html
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Re: THE Eurozone Economics Thread (merged)

Unread postby eXpat » Thu 21 Jun 2012, 12:50:37

The German Economy Has Cracked
A significant economic event has taken place in Europe today...

All through the crisis, the German economy has been stunningly resilient, despite the fact that all of its natural export markets were collapsing.

The miracle run is coming to an end.

The latest Flash PMI report from Markit is not pretty (find the full report here).

The big sub-headline from the report is this:

Steepest drop in German private sector output for three years. Euro crisis leads to survey-record monthly fall in service providers’ business outlook.

And these details from the report indicate the same problems...
Image

http://www.businessinsider.com/german-flash-pmi-2012-6
Not too much left...
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Re: THE Eurozone Economics Thread (merged)

Unread postby radon » Mon 25 Jun 2012, 09:54:56

We have PIGS in the European 2012 semi-finals - Portugal, Italy, Germany and Spain. Germany kicked Greece in quarter finals to join this elite group.

http://www.bbc.co.uk/news/magazine-18577914
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Eurozone agrees on bank recapitalisation

Unread postby dolanbaker » Fri 29 Jun 2012, 04:23:57

http://www.bbc.co.uk/news/world-europe-18620965
EU leaders have agreed to use the eurozone's planned bailout fund to directly support struggling banks, without adding to government debt.

After 13 hours of talks, they also agreed to set up a joint banking supervisory body for the eurozone.

Spain and Italy put pressure on Germany to allow the bailout fund to buy government debt in the markets - a measure to contain borrowing costs.

Eurozone leaders agreed to begin implementing the decisions by 9 July.

However, it could take until the end of the year before the new money becomes available.

Germany blinked!
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Re: THE Eurozone Economics Thread (merged)

Unread postby SeaGypsy » Fri 29 Jun 2012, 05:33:38

Perfect timing for me in the oil price challenge (again), I think the bounce was within 50 cents of my low guess for the year. Lets see if it's more of the roller coaster ride since the peak of '06?
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Re: THE Eurozone Economics Thread (merged)

Unread postby smiley » Fri 29 Jun 2012, 16:34:57

Probably a smart move and the only option to keep the wolves from the door.

The only problem I see is that the banks again get what they want. I can see how oversight of the national budgets might work, the EU has been quite effective in forcing countries into severe austerity programs.

Whether oversight of the banks will ever work, I have my doubts. You cannot regulate what you don't understand, and the financial institutions have been very effective in creating such complicated instruments that nobody understands the risks, even their own auditors.

I would still be more in favor of a banking insurance fund, an stability funded completely by banks. Perhaps if the banks would be forced to pay for the mistakes of their peers it would encourage them to regulate themselves.
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Re: THE Eurozone Economics Thread (merged)

Unread postby argyle » Mon 02 Jul 2012, 04:06:50

smiley wrote:Probably a smart move and the only option to keep the wolves from the door.

The only problem I see is that the banks again get what they want. I can see how oversight of the national budgets might work, the EU has been quite effective in forcing countries into severe austerity programs.

Whether oversight of the banks will ever work, I have my doubts. You cannot regulate what you don't understand, and the financial institutions have been very effective in creating such complicated instruments that nobody understands the risks, even their own auditors.

I would still be more in favor of a banking insurance fund, an stability funded completely by banks. Perhaps if the banks would be forced to pay for the mistakes of their peers it would encourage them to regulate themselves.


There will be a banking union,which will pay for banks that need to be bailed out, and also EU wide guarantee savings (to x amount), etc. So even if a country (like Greece were to leave the EURO, the other banks would still guarantee the Greece bank deposits, alleviating the banking run happening there)
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ECB staff suffering from burnout - union

Unread postby dolanbaker » Tue 03 Jul 2012, 08:41:00

http://www.rte.ie/news/2012/0703/ecb-st ... union.html
Staff at the European Central Bank are suffering from stress and overwork from coping with the euro zone's debt crisis.
This is according to a study by the IPSO labour union seen by AFP today.

In an internal ECB staff poll, 80.1% of employees complained of a "heavy workload" at the moment and 74.4% of them said it was a "permanent" situation.

More than 76% said they were working longer hours, for which most of them (77.7%) received no extra pay.

Nearly 16% of those polled said their workload was having a "serious effect" on their private life and/or their health.


Considering the mess the financial crisis is leaving, it's no surprise they're overworked!
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Re: THE Eurozone Economics Thread (merged)

Unread postby smiley » Tue 03 Jul 2012, 18:09:18

There will be a banking union,which will pay for banks that need to be bailed out, and also EU wide guarantee savings (to x amount), etc. So even if a country (like Greece were to leave the EURO, the other banks would still guarantee the Greece bank deposits, alleviating the banking run happening there)


I could be wrong on this but, as far as I understand the draft plans the oversight would come from the ECB and the guarantees from the ESM. So while it is a step forward in a sense that the burden of a bank collapse is shared over the whole EU-17, and that bank oversight would become a shared responsibility, it would still be the taxpayers who have to front up the money and not the banks.
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Re: THE Eurozone Economics Thread (merged)

Unread postby dolanbaker » Fri 06 Jul 2012, 07:43:41

Finland to consider exiting eurozone if they are saddled with debt from other countries
http://www.independent.ie/business/euro ... 60735.html
Finnish Finance Minister Jutta Urpilainen: “Finland is committed to being a member of the eurozone, and we think that the euro is useful for Finland. Finland will not hang itself to the euro at any cost and we are prepared for all scenarios. Collective responsibility for other countries' debt, economics and risks; this is not what we should be prepared for. We are constructive and want to solve the crisis, but not on any terms,”
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Slovenia Downgrade by Moody’s Increases Chances of Rescue

Unread postby dolanbaker » Sun 05 Aug 2012, 23:38:04

http://www.bloomberg.com/news/2012-08-0 ... escue.html
Slovenia’s downgrade by Moody’s Investors Service, which said its struggling banks will need government funding, increases the likelihood that the Adriatic nation will become Europe’s sixth bailout victim. Standard & Poor’s cut its debt grade today.

Moody’s lowered the rating three levels to Baa2, two levels above investment grade, and maintained its negative outlook. S&P cut the rating to A, five steps below the top investment grade, from A+, assigning a negative outlook that indicates it’s more inclined to trim its assessment further than raise it or leave it unchanged.

“The likelihood of support being needed is very high,” Jaime Reusche, a New York-based Moody’s analyst, said in the statement. “This potential additional debt burden comes at a time when the government is already facing significant challenges in its efforts to consolidate its fiscal position.”


Another one looks likely to bite the dust!
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