Euro Area

[InsaneApache]

What's this all about then?

http://yle.fi/uutiset/news/2011/06/g...tml?origin=rss

[gaelic cowboy]

prank I suppose by someone at Reuters

[Furunculus]

What's this all about then?

http://yle.fi/uutiset/news/2011/06/g...tml?origin=rss

lol.

[InsaneApache]

Calm down dears, everything's going to be OK. Pour quoi? Coz Captain Euro is here to save the day.

http://www.captaineuro.com/

Ruth is surely stranger than Richard.

[gaelic cowboy]

Calm down dears, everything's going to be OK. Pour quoi? Coz Captain Euro is here to save the day.

http://www.captaineuro.com/

Ruth is surely stranger than Richard.

what in the name of all that is holy and right in the Guinness brewery is that.

To be honest this is the bigger laugh from todays Irish Times Trichet wins medal for services to European unity

[Furunculus]

what in the name of all that is holy and right in the Guinness brewery is that.

To be honest this is the bigger laugh from todays Irish Times Trichet wins medal for services to European unity

re the link.

trichet can has his financial supervision........... over the eurozone. i am perectly willing to let bloody minded british obstruction bring the entire shooting match down in chaos and misery, rather than be dragged into fiscal union.

liberty has a price, its just a question of how many trichet will sacrifice to pay for mine!

[Louis VI the Fat]

Calm down dears, everything's going to be OK. Pour quoi? Coz Captain Euro is here to save the day.

http://www.captaineuro.com/

Ruth is surely stranger than Richard.

Awesome!!

Captain Euro'll teach all you nay-saying sourpusses!

[gaelic cowboy]

re the link.

trichet can has his financial supervision........... over the eurozone. i am perectly willing to let bloody minded british obstruction bring the entire shooting match down in chaos and misery, rather than be dragged into fiscal union.

liberty has a price, its just a question of how many trichet will sacrifice to pay for mine!

The reality is the ECB is TOO independent and this independence is killing the EU dream slowly a little bit more everyday.

Every time I hear an ECB board member say something like "Well will withdraw support from X if you default/restructure etc etc" I laugh, in a common currency the money flows over borders anyway.

He knows the time of strict independence of the ECB is coming to an end, after all it was only made so independent because the Germans didn't trust the French and Italians to mess with the currency.

[Louis VI the Fat]

The reality is the ECB is TOO independent and this independence is killing the EU dream slowly a little bit more everyday.

Every time I hear an ECB board member say something like "Well will withdraw support from X if you default/restructure etc etc" I laugh, in a common currency the money flows over borders anyway.

He knows the time of strict independence of the ECB is coming to an end, after all it was only made so independent because the Germans didn't trust the French and Italians to mess with the currency.

Captain Euro will make short notice of your fascistoid Euroscepticism!

[gaelic cowboy]

Captain Euro will make short notice of your fascistoid Euroscepticism!

CapnYoro what a joke.

Honestly you dont think there is a case to answer for the ECB been too obsessed with its independence.(while at the same time each member briefing there own national media in a manner no central bank board ever would anywhere)

[Kralizec]

The reality is the ECB is TOO independent and this independence is killing the EU dream slowly a little bit more everyday.

Every time I hear an ECB board member say something like "Well will withdraw support from X if you default/restructure etc etc" I laugh, in a common currency the money flows over borders anyway.

He knows the time of strict independence of the ECB is coming to an end, after all it was only made so independent because the Germans didn't trust the French and Italians to mess with the currency.

Partly. Also in part because they (the Germans) wanted the ECB to be like their own central bank, wich has proven time and time again to be a solid institution. Can't say I disagree.

[gaelic cowboy]

Partly. Also in part because they (the Germans) wanted the ECB to be like their own central bank, wich has proven time and time again to be a solid institution. Can't say I disagree.

Except the Bundesbank was only ever concerned with Germany whereas the ECB is a much larger concern and this was quite frankly beyond it.

Also the Bundesbank was just as caught out by large scale capital flows as everyone else was.

[Kralizec]

Yes, and how does that make the Bundesbank worse than other central banks?

If anything the ECB isn't independent enough. They should never have let themselves get pressured into buying government bonds from Greece and whatnot.

[gaelic cowboy]

Yes, and how does that make the Bundesbank worse than other central banks?

If anything the ECB isn't independent enough. They should never have let themselves get pressured into buying government bonds from Greece and whatnot.

I didn't say they were worse I said they made the same mistakes so they dont get a free pass on this mess, German banks hold massive amounts of Greek paper which suits the ECB fine and must be a black mark on the Bundesbank.

They were not pressured they had to buy lets remember they are the central bank of Greece, plus they must show faith in there own plan to fix Greece how could they expect others to buy Greek bonds to fix the deficit.

Thats like the old central bank of Holland telling the people in say Eindhoven there local bank will be abandoned totally with there savings evaporated, this never happens anywhere and it certainly wont happen under the ECB they have no other plan.

[InsaneApache]

Did I say I'd give it six months a while back? I might have been a tad bit optimistic.

http://uk.reuters.com/article/2011/0...75C3P620110613

"In our view, any such transactions would likely be on terms less favourable than the debt being refinanced, which we, in turn, would view as a de facto default according to Standard & Poor's published criteria," the agency said.

[Adrian II]

[...] most people blame the Euro instead of the greedy people [...]

In a Husarly way, I think that sums it up. Like all social forces, markets create their own problems if left unchecked.

In this case we are dealing with the result of a policy of worldwide financial liberalisation that started in the late seventies and gained full force in the eighties. The reallocation of production to low income countries coupled with rising oil prices caused a steep drop in purchasing power in the West around 1980. Our answer to that has been a horrific expansion of credit, usually based on overvalued real estate. In Japan this credit bubble burst in 1991 when their real estate market collapsed. The same happened in the US in 2007 when their housing market collapsed. As a result, all over the West we had to bail out major banks with taxpayer money. Now states like Greece and the US are going bankrupt and they have to be bailed out, too, with paxpayer money from richer, more stable nations like Germany and China. No nation is exempt from this trend, because of the high degree of interdependence in the global financial system. Britain may well think it is safe, but a recent Channel 4 news documentary has shown that in the present eurocrisis it is exposed to an amount of 399 billion dollars, due to its holdings in CDS (Credit Default Swaps). For comparison: that's one-third of British GNP...

In the end we wil have to curb credit and speculation worldwide. This is going to take a while, maybe a few more shocks to the system will help our leaders to smarten up quicker. Fair markets, as opposed to free markets, are the wave of the future. I will probably not live to see that new Keynesian wave, but hopefully my children will.

AII

[gaelic cowboy]

Oh I forgot to post this a while back, remember how defaulting on the likes of AIB's bank debt would bring down the Euro

hmm didnt happen even with a 90% reduction in the bonds, must be some flaw in the great ECB crystal ball there.

[Furunculus]

one notes with some amusement that the EU has declared war on ratings agencies:

http://www.telegraph.co.uk/finance/e...-agencies.html

tragedy into farce!

[Ronin]

[Vladimir]

See, that's why you guys are in trouble. You need to pay in cash, not trash.

[Vladimir]

Gah!

[Adrian II]

one notes with some amusement that the EU has declared war on ratings agencies:

http://www.telegraph.co.uk/finance/e...-agencies.html

tragedy into farce!

The big three ra's are big failures. They gave A-ratings to Enron till the day it imploded. They invented many of the financial instruments that gave rise to the 2007 US subprime crisis. They gave an A+ to Lehman till the last moment. They awarded Greece an A-rating until the very day in December 2009 when that country admitted it had doctored the books, something the EU finance ministers have known since 2000.

So these agencies are totally useless. Fitch for instance is just guy in a suit named Lacharrière who lives in Paris.

I don't think that replacing them with a useless EU rating agency would improve matters though. It would be better if EU governments decided not to mind the agencies anymore and make decisions based on their own analyses and commitments.

AII

[gaelic cowboy]

The big three ra's are big failures. They gave A-ratings to Enron till the day it imploded. They invented many of the financial instruments that gave rise to the 2007 US subprime crisis. They gave an A+ to Lehman till the last moment. They awarded Greece an A-rating until the very day in December 2009 when that country admitted it had doctored the books, something the EU finance ministers have known since 2000.

So these agencies are totally useless. Fitch for instance is just guy in a suit named Lacharrière who lives in Paris.

I don't think that replacing them with a useless EU rating agency would improve matters though. It would be better if EU governments decided not to mind the agencies anymore and make decisions based on their own analyses and commitments.

AII

I think the accountancy firms were more at fault for Enron but the RA's had the same problems cos they both ended up touting for business and so had a conflict of interest they would get no new business if the assessment was bad.

[Brenus]

The funniest thing is that these agencies are the one that help the Righty Greek Government to manipulate their accountancies and to cheat the system.
They let the only choice to the social traitor Papandreou from a Socialist Party that has socialist only the name to capitulate and bow to them.

[Furunculus]

I don't think that replacing them with a useless EU rating agency would improve matters though.

It would be better if EU governments decided not to mind the agencies anymore and make decisions based on their own analyses and commitments.

agreed.

sadly, if the EU wants to sell debt for its borrowing requirements then it is dependent on the ratings agencies, because private investors make their decisions based off how credible government promises to repay that debt are.

for example, Italy needs to refinance, or rollover, nearly £60b before the end of 2012, and its interest rate on a ten-year bond is now 5.3% which is past the point of sustainable borrowing.

there is no such thing as eu governments ignoring the ratings agencies if they want/need to borrow.

[Brenus]

"there is no such thing as eu governments ignoring the ratings agencies if they want/need to borrow" They can change the status of the European Bank and make it equivalent to the Fed US Bank. It is a political decision.

[Fragony]

Usefull or not, the reaction to it NEINNEINNEIN IT JUST ISN'T TRUE is very telling. The Eurocrats are in panic. More and more is the EUSSR becomming a parody of itself

[Furunculus]

"there is no such thing as eu governments ignoring the ratings agencies if they want/need to borrow"

They can change the status of the European Bank and make it equivalent to the Fed US Bank. It is a political decision.

if the ECB starts issuing eurobonds in order to buy up sovereign debt then it has just created a debt union which would in large part have to be paid for by german taxpayers.

given that the legality of the bailouts is going before the german constitutional courts right now, who are likely to rule that any further such action must be approved by the bundestag, how likely is it that german politicians will vote themselves out of office en-masse by backing a Merkel inspired debt-union?

http://www.spiegel.de/international/...772969,00.html

[Philippus Flavius Homovallumus]

if the ECB starts issuing eurobonds in order to buy up sovereign debt then it has just created a debt union which would in large part have to be paid for by german taxpayers.

given that the legality of the bailouts is going before the german constitutional courts right now, who are likely to rule that any further such action must be approved by the bundestag, how likely is it that german politicians will vote themselves out of office en-masse by backing a Merkel inspired debt-union?

http://www.spiegel.de/international/...772969,00.html

Dept union would essentially be economic union, the performance of the Greek economy would directly impact Germany and France. In such a situation political union would have to follow because you can't have Germany bankrolling Greece while Greece just sulks and/or riots.

Where this is going is scary, where it will end is impossible to tell.

We are litterally reaching make or break for the EU as we know it, and break might be preferable.

Hell, what is the EU Government's deficit? no one has signed off on the accounts for two decades now!

[Adrian II]

there is no such thing as eu governments ignoring the ratings agencies if they want/need to borrow.

There are many ways in which they can ignore the ra's. For instance most European institutional investors are now legally obliged to sell holdings if their rating drops beneath a certain level, but laws can be repealed and incentives granted or taken away.

Most importantly we should realise that a Greek default is not nearly as dramatic as that of Lehman's. It's only our bankers and big investors who keep telling us that is it.

AII