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  1. A loss of capitalisation is certainly not irrelevant for the banking system.

  2. You seem pretty optimist on this; I very much doubt the IMF will get the tranche due tomorrow.

  3. I would not call bankruptcy a "solution".

  4. Exaggeration is part of the game. However, note that the euro already lost 2% of its value since I posted this up.


You might find me At The Edge Of Time.
by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Mon Jun 29th, 2015 at 03:01:54 AM EST
[ Parent ]
Bank resolution Is the solution for failed banks. Lack of inflation has been THE problem as it has made debt burdens and imbalances even more unsustainable.  A 2% devaluation s a mere blip.  Yes if it becomes 5 or 10% on a sustained basis it will have an impact - Mostly by reviving the Euro economy  and helping the ECB to reach its inflation target quicker.  Increases in interest rates are still a long way off, and won't be a broblem so long as they remain the rate of inflation.  All in all, a struggling Portuguese economy should welcome a Euro devaluation- even if it drives oil prices higher -itself not a bad thing in the long run.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Jun 29th, 2015 at 03:40:44 AM EST
[ Parent ]
  1. Bank capitalization is not measured by market cap, and banks do not have any very large direct exposure to common stock unless they are doing things that should not be legal. So the stock market can burn.

  2. What the IMF gets or does not get does not matter very greatly for the ability to maintain supermarkets and pharmacies in stock. The IMF can be allowed to burn.

  3. That is a statement of ideological preference, not economic necessity.

  4. Two per cent is not sufficient to matter to any business model that matters to the real economy. Those who lose their shirt over two per cent, or even five per cent or ten per cent, eurodollar fluctuations should be allowed to burn.

- Jake

Friends come and go. Enemies accumulate.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jun 29th, 2015 at 11:44:30 AM EST
[ Parent ]
  1. You should probably read a bit more on the collapse of Banco Espírito Santo.

  2. I believe you missed my point here. When Papandreu announced the referendum back in 2011, for a few weeks Greece was only able to acquire petroleum from Iran. It is a matter of credibility.

  3. No ideology here, nor economics.

  4. Again you are past the point on this, even if the euro has flat lined against the dollar. What matters is the action of ECB in face of devaluation. A devaluation would be good for most Portuguese business and the economy in general.


You might find me At The Edge Of Time.
by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Wed Jul 1st, 2015 at 04:17:17 AM EST
[ Parent ]
  1. banks that hold large exposure to common stock are not primarily in the business of banking. Let them burn.

  2. Syriza has been planning this for some time. There should be supplies in the pipeline for a few weeks.

  3. "Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. - Keynes

  4. the Fed Funds rate is historically a reliable anchor for ECB interest rate policy. The ECB's intellectual vacuity works in our favor here.

- Jake

Friends come and go. Enemies accumulate.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jul 1st, 2015 at 10:39:54 AM EST
[ Parent ]

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