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European Bank Recapitalization


The €115 billion would not be so bad were not the expectations that the banks should either recapitalize themselves or that insolvent sovereigns should recapitalize their own banks. But that is the expectation, so I guess we will just see the EZ crash and burn? Were these banks recapitalized how long would it be before they were right back where they are now?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Dec 19th, 2011 at 08:53:37 AM EST
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If you can believe this, the incoming Spanish government is considering a Bad Bank solution not unlike NAMA whereby the Spanish state would buy over 20 billion in bad assets (chiefly, undeveloped land) while at the same time vowing to reduce deficits and debt to keep Merkel happy.

It appears that the experience of NAMA is one of the main reasons why the Bank of Spain opposes the measure, and even private banks don't like the idea.

On the other hand, a number of entities which have been rescued, merged, restructured... in the past 3 years keep coming up with bigger and bigger accounting holes. The latest one was up to 17 billion in losses at Caja de Ahorros del Mediterráneo, where the initial estimate was 5 billion...

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 09:01:51 AM EST
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I can't remember if NAMA ended up on the official deficit or not? If they construct the SPV properly and browbeat the statistical agencies properly then they can take on all that debt without it being part of the deficit. Cunning, eh?
by Colman (colman at eurotrib.com) on Mon Dec 19th, 2011 at 09:18:04 AM EST
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This is 2011, not 2008. After the EFSF it's become clear nobody in their rightmind is going to touch an off-balance-sheet government "vehicle" with a 10-foot pole.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 09:33:50 AM EST
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There are people involved who are in their right mind? Can we put them in charge?
by Colman (colman at eurotrib.com) on Mon Dec 19th, 2011 at 09:51:43 AM EST
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Maybe. No.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 09:55:22 AM EST
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