The Big Bailout of the Eurozone (Another crisis coming? - Seriously)

[Declan]

Timing is everything and with the snow and travel disruption dominating the news Lendahand and pals just continued on their merry way of destroying the country.
And 1 in 4 people will still vote for them. Unreal

[Main Street]

The Afghanis are much more sensible, they heed the warning signs when the banks use the deposits to give out large loans to their cronies for the purposes of property speculation which in turn drive up property prices for the depositers.

http://www.tampabay.com/incoming/afghans-rush-to-pull-money-out-of-beleaguered-bank/1119264
'The rush followed the resignation of two of the bank's top executives this week amid allegations of mismanagement and questionable real estate loans.'

[Main Street]

That was really about the US Bank Bailout. That appears to have worked (at the moment) while the EU one hasn't.

It appears to have worked if Newsweek type articles are to be believed at face value.
Who is it working for?
The banks are motivated to shortsale and foreclose rather than helping modify mortgages because they make more money via undisclosed/secret payments from the FED via FDIC

'1miillion homes in 2010 so far, about 3 million foreclosures and shortsales in 2009 and 2010 is about 12 million homeless people'
the program (HAMP) meant to prevent three to four million foreclosures will be lucky to stop even get to one million. http://www.theatlantic.com/business/archive/2010/12/government-foreclosure-prevention-effort-continues-to-wane/68427/

The treasury has more or less printed USD 13TN,  handed it to the banks at 0.25% so they can buy up debt, and earn interest while devaluaing the value of the USD that the people have left.
In summary,
'21 million unemployed, millions of them getting unemployment benefits; $9.3 trillion in lost house values; a massive transfer of income from savers to banks because of the Fed's policy of low interest rates on short-term money, etc.'

[bennydorano]

That was really about the US Bank Bailout. That appears to have worked (at the moment) while the EU one hasn't.

The difference seems to be that the States did it all in one go, ignoring the egos in the way and force feeding medicine to institutions it decided needed it. Compare that with first AIB and BOI claiming they didn't need funding, then Greece and Ireland denying they needed assistance. Now Portugal and Spain are in the same boat.

The banks in the Euro should have been put under ECB control. They could decide who sank or swam, or to bail them all out in one go, like the Fed did. Ironically the Fed did socialism better than the EU.

Instead we have the EU standing waiting beside the next domino, waiting to see if it will fall, then trying to catch it before it sets off the next one. It isn't working.



Somewhere on this thread the question was asked (which the media never seem to ask): what if the Bank Guarantee doesn't work?

The answer was NAMA.

Same question: (anyone seen it in the media?) What if NAMA doesn't work?

Answer: IMF/EU bailout and serious austerity measure.

And now we are at the same question again: What if...............?

As usual we have Lenihan berating people who raise the issue of default in any way. We never learn.

It's a good argument for a federal Europe.

I was reading Muppet's post thinking the exact opposite.  Fedearlism works for the USA because they've one language (official anyway), a clearly defined governmental and judicial system, not to mention it's cultural ties & a seemingly inate patriotism.  Europe has none of these things going for it (as a single entity), an array of lanaguages & cultures, differing forms of Government, differing judicial systems.  Europe's got little in common bar an increasingly artificially maintained currency.  I'll save someone the bother of retorting with 'our differences are one of our strengths' - balls.

[Main Street]

The starting premise to Muppet's post was faulty, that the bank bailout has worked (so far) in the USA.
It is a surreal exercise to debate a perceived USA function V EU disfunction, as it relates to state financed bailing out the collapsed banks.
Both the EU and USA have just temporarily plugged a leak.
It is the next inevitable crisis that will buckle the EU (first) then the USA. There is little capacity left for state bailouts to replace the lost inflated values that came from overheating an economy.
The relentless attacks on real income will see that the next crises comes sooner rather than later.

[Bogball XV]

The starting premise to Muppet's post was faulty, that the bank bailout has worked (so far) in the USA.
It is a surreal exercise to debate a perceived USA function V EU disfunction, as it relates to state financed bailing out the collapsed banks.
Both the EU and USA have just temporarily plugged a leak.
It is the next inevitable crisis that will buckle the EU (first) then the USA. There is little capacity left for state bailouts to replace the lost inflated values that came from overheating an economy.
The relentless attacks on real income will see that the next crises comes sooner rather than later.

I'd like a bit more explanation of that MS, I agree that we're a long way from having sorted out any of the problems yet and that most 'solutions' have been stop gap measures trying to buy time, but I don't really get the mechanics of it all.  I still can't understand how inflation has stayed so low for example (although I have noticed a very definite upward trend in food prices over the past 4/5 months), I would be interested in learning more on it all though.

[Declan]

http://www.independent.ie/business/irish/swiss-central-bank-refuses-to-touch-irish-state-bonds-2483913.html

Hasn't gone away

[seafoid]

The starting premise to Muppet's post was faulty, that the bank bailout has worked (so far) in the USA.
It is a surreal exercise to debate a perceived USA function V EU disfunction, as it relates to state financed bailing out the collapsed banks.
Both the EU and USA have just temporarily plugged a leak.
It is the next inevitable crisis that will buckle the EU (first) then the USA. There is little capacity left for state bailouts to replace the lost inflated values that came from overheating an economy.
The relentless attacks on real income will see that the next crises comes sooner rather than later.

I'd like a bit more explanation of that MS, I agree that we're a long way from having sorted out any of the problems yet and that most 'solutions' have been stop gap measures trying to buy time, but I don't really get the mechanics of it all.  I still can't understand how inflation has stayed so low for example (although I have noticed a very definite upward trend in food prices over the past 4/5 months), I would be interested in learning more on it all though.

My understanding is that demand is very weak, Bogball.  Deleveraging is the name of the game and then you have high levels of unemployment which are also suppressing demand. Most of the growth in demand from 2002 on was illusory as it was fed by debt and now that debt has to be paid back. Deflation seems to be a bigger worry than inflation. 
 
In the EU there is some temporary inflationary pressure coming off the back of commodity inflation but the question is whether it is going to be passed on to consumers who aren't spending money with anything like the passion of the past.

http://www.ft.com/cms/s/0/3c6e2fac-17f3-11e0-9033-00144feab49a.html#ixzz1A4lvfS00

" Nick Kounis, economist at ABN Amro in Amsterdam, said: "This commodity-price driven rise in inflation will only have implications for ECB policy if the central bank were to see 'second round' effects emerging, in terms of knock-on effects on other prices or rising inflation expectations." The ECB would also find it hard to raise its main interest rate while continuing to prop up the banking system in countries such as Ireland and Greece, the countries worst hit by the debt crisis – although ECB policymakers have been careful to keep such a step a theoretical possibility."

[Declan]

http://www.independent.ie/opinion/columnists/david-mcwilliams/david-mcwilliams-swiss-bank-vaults-filling-up-with-our-deposits-2483877.html

After a couple of weeks off and deliberately avoiding news or blogs etc re the financial crisis things seem to be worse than ever. Where will it all end I wonder?   

[whiskeysteve]

Portuguese 10 yr bonds have soared and broken the 7% level, going from under 6.8% to over 7.1% in 24hours. Surely its a only matter of weeks now if Ireland was anything to go by.

http://www.bloomberg.com/apps/quote?ticker=GSPT10YR:IND

Spain also at 5.5% and climbing and as is often reported, is too big to bailout.

[Bensars]

Would the recent rise not be part due to the EU announcing that Bond holders could be "burnt" in the future (unlike ireland) and therefore causing less confidence as a whole ?

[Declan]

The Italian's are also heading for 5%

But shure don't worry about anything –it'll be alright!!

Don't mention the staes either
Talking about the states !!! Treasury Secretary Tim Geitner suggested today that the US could face having to default by March 31.
Geithner presses Republicans to lift U.S. debt limit - http://news.yahoo.com/s/nm/20110106/ts_nm/us_usa_treasury_debtlimit

And if you've time to spend reading some interesting stuff

http://theautomaticearth.blogspot.com/2011/01/january-6-2011-does-federal-reserve.html

[bennydorano]

Portuguese 10 yr bonds have soared and broken the 7% level, going from under 6.8% to over 7.1% in 24hours. Surely its a only matter of weeks now if Ireland was anything to go by.

http://www.bloomberg.com/apps/quote?ticker=GSPT10YR:IND

Spain also at 5.5% and climbing and as is often reported, is too big to bailout.

Spain will be fine, China have pledged to buy so much sovreign debt, no idea why. Why do the media throw fuel on the fire rather than play their part in calming things down.  Was even the same with the recent weather, the hyperbole was embarassing at times.

[muppet]

I'm hearing Portugal's goose is cooked.

I thought they would last till at least May but don't think that will happen now.

[Bogball XV]

time for gerry to bite the bullet and borrow for the rest of us?  Only solution if the euro (eu project?) is to survive?

Like Declan, I've been avoiding all writings and debate on all of this - i can't be bothered listening to the rubbish being spouted by those who have the power to change things.

In addition I'm highly unlikely to vote in any upcoming general election, maybe if a new party were to emerge, but I cannot see a scenario where any of the current parties will be getting my vote.