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Barroso to plebes: nice indebted democracy you have there... | 68 comments (68 topical, editorial, 0 hidden)
Re: Barroso to plebes: (4.00 / 4)
kcurie:
all this has to do with the fact that the German banks lost much much more than reported

I don't know about losses, but here's Wolfgang Munchau:

Why this crisis will go all the way

at its core, it is not a sovereign debt crisis at all - but a highly interconnected banking crisis about to blow up. There is a dynamic at work that the macroeconomic data does not convey - and that the political response to the crisis does not address.

Those inter-connections are even bigger than we had previously thought - but it should not be suprising given the massive current account imbalances in the eurozone.  In its latest Quarterly Review, the Bank for International Settlements came out with some shocking figures. German banks have a $200bn exposure to Spain, $175bn to Ireland, and $50bn, respectively, to Greece and Portugal, making a total exposure to the four countries of almost $500bn, more than 20% of German GDP. French banks have an exposure of $250bn to Spain, $80bn to Ireland, $100bn to Greece, and $50bn to Portugal, also almost $500bn in exposures, but more than 25% of French GDP. Total foreign bank exposures are well over $1100bn to Spain and $800bn to Ireland.  Add the four countries together, and you are arrive at more than $2 trillion.

Now, I am not saying that there is $2 trillion of bad debt. I have no idea how big the portion of genuinely bad debt is. The problem is that no one else knows it either, and that includes the banks, which are now refusing to lend in the inter-banking market.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jun 17th, 2010 at 09:49:59 AM EST
[ Parent ]
Re: Barroso to plebes: (4.00 / 4)
afew:
In its latest Quarterly Review, the Bank for International Settlements came out with some shocking figures. German banks have a $200bn exposure to Spain, $175bn to Ireland, and $50bn, respectively, to Greece and Portugal, making a total exposure to the four countries of almost $500bn, more than 20% of German GDP. French banks have an exposure of $250bn to Spain, $80bn to Ireland, $100bn to Greece, and $50bn to Portugal, also almost $500bn in exposures, but more than 25% of French GDP. Total foreign bank exposures are well over $1100bn to Spain and $800bn to Ireland.  Add the four countries together, and you are arrive at more than $2 trillion.
The Bank of International Settlements published a 68-page report in which half a page is occupied by these statistics. The exposure to other OECD countries is nowhere to be found. Germany has larger aggregate debt than Spain and higher public debt-to-gdp ratio - who's exposed to that? BIS isn't telling.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Carrie (migeru at eurotrib dot com) on Thu Jun 17th, 2010 at 09:54:32 AM EST
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Re: Barroso to plebes: (4.00 / 3)



"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Thu Jun 17th, 2010 at 01:46:06 PM EST
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Re: Barroso to plebes: (none / 0)
lol

Diversity is the key to economic and political evolution.
by Cat on Thu Jun 17th, 2010 at 02:28:27 PM EST
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Re: Barroso to plebes: (none / 1)
You will notice Italy was not one of the 4 "PIGS" that the BIS published exposures on. It is also the only one PIIGS that Deutsche Bank has admitted to still having any direct exposure to.  Narrative war...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Carrie (migeru at eurotrib dot com) on Thu Jun 17th, 2010 at 03:48:17 PM EST
[ Parent ]
Re: Barroso to plebes: (none / 1)
Now I know why Lenihan guaranteed not just Irish bank depositors, but ALL bondholders in Irish banks - including subordinated bond holders who were paid a premium to take on risk.  Not so much the hidden hand of the market, but the hidden hand of EU banks?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 17th, 2010 at 10:13:18 AM EST
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Re: Barroso to plebes: (4.00 / 4)
Almost certainly, yes.

One of the stories of Roskilde Bank that didn't get much play at the time was that the bailout didn't bail out the depositors, and it didn't bail out the Danish banks.

It bailed out DeutcheBank and a couple of Dutch banks, who had been funding Roskilde Bank.

And the Danish financial sector unanimously pressed for the bailout, partly, of course, out of class loyalty, but mostly because they were afraid that DeutcheBank would take it personally and retaliate if they didn't.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 17th, 2010 at 10:49:46 AM EST
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Re: Barroso to plebes: (4.00 / 7)
It's beginning to sound like Deutsche Bank is Europe's vampire squid.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Carrie (migeru at eurotrib dot com) on Thu Jun 17th, 2010 at 10:55:13 AM EST
[ Parent ]
Re: Barroso to plebes: (4.00 / 2)
That has been clear for a long time.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Thu Jun 17th, 2010 at 03:04:15 PM EST
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Re: Barroso to plebes: (none / 0)
have you hear about the recent attack against DB from the spanish quarters.. it is really amazing.

with a little bit of luck we can get rif of it..and Merkel with it.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Thu Jun 17th, 2010 at 12:27:18 PM EST
[ Parent ]
Re: Barroso to plebes: (4.00 / 3)
afew:
Now, I am not saying that there is $2 trillion of bad debt. I have no idea how big the portion of genuinely bad debt is. The problem is that no one else knows it either, and that includes the banks, which are now refusing to lend in the inter-banking market.
No, not now. The liquidity crunch started 3 years ago and has never gone away.

However, its severity has oscillated. It was really bad in August 2007, leading to the failure of Northern Rock. It was bad again in the summer of 2008, leading to the Lehman Brothers failure, Iceland's collapse, TARP and the G20. 2009 was the year of business as usual, and now this article claims there's been a serious draught for two months already... So, is another September failure to be expected?

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Fri Jun 18th, 2010 at 03:55:38 AM EST
[ Parent ]

Barroso to plebes: nice indebted democracy you have there... | 68 comments (68 topical, 0 editorial, 0 hidden)
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