It never rains but it pours!

Moodies has downgraded 16 Banks. Its pissing down in Spain!

See: http://www.bbc.co.uk/news/business-18100049

Hmm, is that the "bad cop", who's going to be the "good cop".
I tend to the view that such pronouncements from those in positions of power are carefully orchestrated as part of a plan.

She is bang on the ball.
We got an old saying up north...those who pay...say.

CL has been handing out money whenever its been asked for from Europe, so damn right she can turn round and deliver a few uncomfortable home truths when she gets a bit sick of those she has doled out money to turning round and trying to give her a kicking.

Greece aspired to German prosperity without either doing or understanding the work needed to get there.

Folk also need to start understanding the amount of German anger down at taxpayer levels. Anger at Greece and Italy for basically betraying them and anger at France in the shape of Hollande who is seen as some Johnny-Come-Lately nobody who suddenly turns and feels free to lecture everybody AND demands their money to fix the problem whilst he protects his own.

kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/24_Nigel_Farage_-_We_Are_on_the_Edge_of_a_Total_Social_Breakdown.html

I don't think anyone comes out of this well looking at 'development' in the financial business world over the past 20 or 30 years.


OK, It's from Wikipedia and may be subject to some corrections but ....

Banking Regulatory capital requirements

Mark to Market Accounting

My helicopter level understanding of how it all works (or doesn't, depending on your viewpoint) is something like this.

A bank has to have underpinning capital. This may ba a mix of what we might think of as 'real' capital (based on the bank's shares and stuff and so relatively secure) and notionally 'guaranteed' realisable assets based on busines activities - like the value of a property backed loan (say a mortgage) and the income stream that it will produce. Other stuff too but lets keep it simple.

Having identified this capital the bank is then permitted to lend and invest something like 10 times that amount (keeping it simple) through its business activities.

Interestingly this means that the debt realted to teh load for a mortgage can potentially be treated as an asset that has capital value which can then underpin further loans at a multiple ratio.

So when you sell Joe Scruggins a mortgage for, say, 100,000 that value may then be added to your capital base calculation. Since your capital base requirement is only 10% (say) of what you can lend it means that having Joe sign the mortgage allows you additionally support an further 900,000 in loans to tohers without breeching the rules. (I don't claim the figures are corwrect - just an illustration.)

Fine when things are going well but what if the market stumbles?

Well if Joe's house was worth 120,000 when he signed up and he paid a 20,000 deposit the bank is OK as long as Joe keeps paying or he stops but the property can still be sold for the outstanding mount or more.

If however the sale price is below that (or Joe took out a readily available 100% mortgage the availability of which had maybe already distorted the market values higher then they should have been) the bank is not only looking at a trading loss but starts to have a capital requirement problem too.

And that's where things start to get very messy and may spiral out of control as we saw back in 2008.

There are, of course, other influences and possibly some very poorly thought through regulatory requirements that added to the problems - probably best to read the Wiki pages to get a feel for those.

If it's all BS and my very rough understanding and description is a mile or more off target .... I'll look forward to reading a more authoritative dscription later today!

Nowhere close.

0.5% tops for the UK. May well hit 4 for the Eurozone.

Merrill are basing that on a static system model, i.e. results predicted from today on today's information. That instantly makes the model:

A) obsolete
and
B) wrong

That of course leads us to the output which of course will be wrong.

We are not in a static system, but one that is very very dynamic. Those dynamics are highly volatile, contain numerous known Actors and even more numerous unknown Actors. There are economics to consider, politics, elections, society as State/organisation Actors and society as individual Actors and corporate entities. The amount of money involved also means the pyschology of the Actors change.

Merrill are doing a best guess figure based on known information then angled for best impact.

She's also totally fking incompetent. If she was a doctor she'd be struck off. First of all she's responsible for deliberately infecting the patient with the addictive Euro disease, literally forcing it down the greedy Greek throat, a bit like a fois gras goose. Then her idiotic blitzkrieg medicine has virtually killed the patient she launches into this rant over it's body. Yet she still insists that weaning Greece off the euro will result in death. What a stupid she is.

Good to see DJRC on the button again. I remember the accuracy and distinctive focus in his many earlier posts on here and he has been proved correct every time.

If the UK could get its political act together the opportunities for the UK to make progress with the only real players left in Europe, Germany and the Scandinavian countries is immense. There will be winners in this and the UK should be one.

No matter how badly we are affected by this impending maelstrom, Greece Portugal, Spain, France, Belgium and the other economic edge riders within the Euro will be massively more damaged and weakened. I take no pleasure in this but this IS an OPPORTUNITY for the UK.

There will be new alliances forged in the intense heat that the immense economic and financial failures will produce across Europe, Fortunes are being lost and the corollary of this is always, that fortunes are being made. The UK should be in the rising camp. If only we had decent political leaders.

Turning to the Banking question, and the complete unmitigated disaster, that the world banking system has become, whilst being totally, authorised, regulated, supervised controlled and monitored, throughout the world, it is clear to me, that a new approach is needed

The supervisory financial bodies and governments in every country have spent billions in regulating the banks. To absolutely no effect, other than hand wringing and early retirement on full pensions for all the miscreants, as each new financial disaster appears.

The Treasuries of every Sovereign state and the Central Bank of every country have all been acting to their fullest ability throughout this disaster with absolutely no positive results whatsoever.

Banks are folding like ninepins. Losses by the Billion are being racked up by JP Morgan and other whilst being totally regulated under the new financial systems introduced less than three years ago, following the 2008 world banking crisis.

The various regulators and lenders such as the World Bank, the IMF and Uncle Tom Cobley and all, who have all been in their collective grand places, at huge cost and have carefully monitored and controlled the Banking structures throughout the western world, throughout this period, whilst the many obvious irregularities have grown and prospered, within banking, as it has become today.

With the result that the entire system is completely out of control. The Taxpayer has become a convenient patsy, unrepresented, unable to receive any benefit, from the Billions wasted and yet totally responsible, for saving the financial world, from the awful consequences that this madness has wrought throughout the financial systems of the world.

This cannot go on. I really cannot believe that I am alone in thinking another form of world banking structure has to be created before this nonsense can be ended.

Bankia is Bust. Fourteen other Banks in Spain are downgraded and effectively leper lenders from this point on. Less than five years from the arrival of the biggest Banking crisis in the world caused all the Banking systems to be revised totally. Spain has not gone bust yet, but it will. The rescues of these Banks are completely pointless, because the Sovereign State itself is insolvent. The whole lot is going over.

Spain cannot afford to bail out their banks. They can print the money, with the help of the ECB, but we are back to the daft, good money after bad nonsense we have seen in Greece with the ECB.

We cannot have stable economic growth or indeed any economic growth if the taxpayers cannot rely upon the safety of their savings. This is the reality the requires addressing. Money is no longer safe in Banks because the system we are using are simply not fit for purpose.

We are at the point where the public are being warned, once again, that a British Bank, Santander may fold. Back to the £85,000, government limit etc. I fully understand that the government (Taxpayer) will save the bank but ordinary people cannot face a situation where their few savings are in a Bank that may fold every other week. This was headline news yesterday. Less than five years after the last lot.

This is becoming seriously unacceptable. We are simply losing control of the economic fundamentals in all of this. Ordinary people deserve much better than politics in 2012 is producing.

What shall we do now? I await the suggestions with real interest.

Be under no illusions it is being KEPT out of the media,the longer they can postpone doomsday the better for them,hence no coverage AT ALL of the queues of people withdrawing way over 1bn now in Greece and Spain some has been leaving French accounts too!

Let's not forget that France is only half way through an election process so there will be much being said and done (and not said and not done) by many parties within and without France whilst that process bobs along.

Iirc the next round of French AND Greek elections fall on the same weekend. Now that could be very interesting.

As an aside - I don't suppose the ECB has managed to get its paws on the 4 billion or so that JP Morgan seems to be admitting it has lost? Someone must have it I suppose - whatever 'it' is.