Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

[riposte]

The business reporters just laughed at him, in the press conference.

It was embarrassing.

Yeah Cass ..... it was like someone recieving dreadful news saying "it can't be" when everyone present knows it is.

[Ephilant]

They left us out

Your on the bow of the ship, masthead job...

[C. Flower]

Your on the bow of the ship, masthead job...

Oh.

From your parish, Yanis Varoufakis talks about "the death embrace of insolvent nations and insolvent banks."

He still believes that Europe could print itself out of this - but his description of Draghi's performance over the last week is good.

http://yanisvaroufakis.eu/2012/08/03...the-short-run/

[DCon]

Oh.

From your parish, Yanis Varoufakis talks about "the death embrace of insolvent nations and insolvent banks."

He still believes that Europe could print itself out of this - but his description of Draghi's performance over the last week is good.

http://yanisvaroufakis.eu/2012/08/03...the-short-run/

Some of the German press agrees with Yanis

Financial daily Handelsblatt writes:

"Because politicians have failed in their fiscal policies, they are leaving it up to monetary policymakers. Certainly it is easier to wash their hands of it. … But this won't help. The governments must govern. They have to figure out how much solidarity there is, and how much they can get their voters to suffer. Then they need to find common ground on how the euro can be rescued without printing new money. One thing is clear: Monetary policy alone cannot replace these decisions. It will only delay them. Merkel, Monti, Hollande and the other leaders must get their hands dirty, as uncomfortable as it may be."

Conservative daily Die Welt writes:

"The ECB would be well-advised to give way to politicians this time. With his grandiose announcement that he would save the euro at any price, Draghi has already come dangerously close to a red line that a central banker should never cross. The border between fiscal and monetary policy -- which has already been blurred to the point of being unrecognizable -- would be completely nullified if the ideas being discussed were to become a reality."

"It is also sham for politicians to reject the collectivization of debt or any form of a transfer union, only to leave it to the ECB to finance sovereign debt through the back door by printing more money -- to everyone's detriment. Draghi and his colleagues are responsible for the euro, but they are not democratically elected officials. Within their constraints, they can certainly help save the currency union. But the decision is a political one. … Fresh billions alone, regardless of their form, won't solve the problem."

http://www.spiegel.de/international/...-a-848119.html

[DCon]

The FT say Draghi broke the ultimate euro taboo

That taboo is that no-one in the ECB should ever admit that the euro might break apart. The objective of the taboo (which admittedly has previously been broken in the “special case” of Greece) has always been to ensure that markets should not feel the need to reflect any concerns about possible foreign exchange risk among the member states which comprise the euro.

By admitting that this “convertibility risk” now exists, the ECB president has implicitly acknowledged that the permanence of the single currency is not fully credible in the financial markets. The recognition of redenomination risk after a potential devaluation is one reason, he implies, why sovereign bond yields are now so high in Spain and Italy. He has said that this prevents the ECB from transmitting its intended monetary stance into those economies, which gives the ECB the right to take direct action to reduce these bond yields.

The bedrock of this guarantee is our old friend the ECB’s Target 2 payments system, which ensures that payments made in euros by solvent and liquid entities will always clear, wherever they are made within the eurozone. By this means, the ECB ensures that the market does not need to worry that a Greek or Spanish euro will ever be worth less than a German euro.

What lies behind this guarantee is, however, an obscure mechanism which in effect means that the national central banks of the strong economies (eg the Bundesbank) are offering to extend a potentially unlimited amount of credit to the central banks of the weaker economies (eg the Bank of Spain) in order to ensure that the monetary union stays intact

balance of payments deficit means that Spanish residents are making larger outgoing payments to (say) Germany than German residents are making to them. Since 2008, the outflow has been driven by private sector capital flows, not by a current account deficit, but it still needs to be financed. So how does this outflow of private money actually get financed? It gets financed by an equal and opposite flow between the central banks. As a result, the Bank of Spain builds up a debit and the Bundesbank builds up a credit.

In the case of two completely independent countries, these debits and credits would get settled by a payments flow of between the relevant central banks. Under the Gold Standard, this flow would be in gold itself. Under the Bretton Woods system, it would be in dollars. In either case, the outflow of official reserves would force Spain to take steps to eliminate its balance of payments deficit by tightening monetary policy or allowing the exchange rate to depreciate, so the problem would, in principle, be self correcting.

The key difference between these situations and the euro mechanism is that the the debits of the Bank of Spain never get settled at all; they just get larger and larger, for as long as the Spanish balance of payments imbalance persists.

http://blogs.ft.com/gavyndavies/2012...#ixzz22i1xrWXh

[riposte]

Italy's Prime Minister Mario Monti has warned of a "psychological break-up" of Europe that must be contained.

In an interview with Germany's der Spiegel magazine on Sunday, he said the eurozone crisis was creating national resentments that could damage the EU.

http://www.bbc.co.uk/news/business-19136298

[ang]

Italy's Prime Minister Mario Monti has warned of a "psychological break-up" of Europe that must be contained.



http://www.bbc.co.uk/news/business-19136298

Ah yes Mario also believes that National Governments must not allow themselves to become bound by their own parliaments when it comes to EU negotiations.

Indeed Mr Monti lets all give up democracy in the aid of our unelected European elites.

"If governments were to let themselves be bound completely by the decisions of their parliaments without maintaining their own scope for negotiation, Europe is more likely to break up than see closer integration," he warned.

http://www.google.com/hostednews/afp...13531da926.901

[C. Flower]

We're on the edge of very big political and economic shifts that have nothing to do with democracy.

[riposte]

We're on the edge of very big political and economic shifts that have nothing to do with democracy.

Yeah ... and at the same time we have arrogance to foist it ("democracy") on the Arab countries.

[C. Flower]

Yeah ... and at the same time we have arrogance to foist it ("democracy") on the Arab countries.

Here we go....

EU to come up with proposals for an EU-wide "banking supervisor" by Sept. 11th.

http://online.wsj.com/article/SB1000...EFTTopWhatNews

[ang]

Here we go....

EU to come up with proposals for an EU-wide "banking supervisor" by Sept. 11th.

http://online.wsj.com/article/SB1000...EFTTopWhatNews

I imagine this will be one of the easier steps of the full USE agenda to fulfil - "Was the banks wot dunnit" - so a lot of people will be very happy to allow Europe to take control of the "damned"

Does not though excuse an unelected PM calling for the bypassing of National Parliaments to fulfil the bankers agenda. Panic rising, masks slipping ............

[ang]

There must be somebody somewhere within Europe powerful enough to shout STOP to this "irreversible euro" rubbish - Euro Falls Fourth Day Versus Dollar As Germany Sees Growth Risk -

The euro weakened for a fourth day against the dollar as Germany’s economy ministry said the outlook for faster growth was fading amid the currency-bloc’s sovereign-debt crisis.

http://www.bloomberg.com/news/2012-0...olds-gain.html

[C. Flower]

There must be somebody somewhere within Europe powerful enough to shout STOP to this "irreversible euro" rubbish - Euro Falls Fourth Day Versus Dollar As Germany Sees Growth Risk -

http://www.bloomberg.com/news/2012-0...olds-gain.html

All the "healthy" economies selling raw material to China may be about to experience a grinding halt.

The pound is struggling too.

More stuff on the market than people want or need, and wages too low to buy, jobs too insecure to borrow.

[ang]

All the "healthy" economies selling raw material to China may be about to experience a grinding halt.

Funny you should say that - Luc Coene, who heads the Belgian National Bank is of a similar opinion though termed in a rather different manner -

"It is clear that something is happening in the world economy, as well as in the European economy, which is clearly evolving in a negative direction," Coene told the paper.

https://mninews.deutsche-boerse.com/...gatively-press


Also implying there may be a need for a recap of Dexia due to market conditions etc. etc..............

[C. Flower]

Funny you should say that - Luc Coene, who heads the Belgian National Bank is of a similar opinion though termed in a rather different manner -

https://mninews.deutsche-boerse.com/...gatively-press


Also implying there may be a need for a recap of Dexia due to market conditions etc. etc..............

I see that Greece is selling T bonds to repay ECB debt. Robbing Peter ?