Is the end nigh for the Euro? [vol. 3]
Discussion
Condi said:
There is an interesting article on the BBC site about how much Deutschbank is actually worth. Its shares have gone down by 70% this year!
I had heard/read somewhere that DB is in a worse state than Lehman Bros were just before they went bust. Also one of the top guys at Lehman made a statement about how stable the company was, assets realistically priced, blah blah etc and 5 days later filed for Bankruptcy. Recently DB's CEO made a similar comment that the bank is is a strong position to grow it's cash reserves organically and they do not need a capital injection.... hhhmmm. The IMF have also labelled DB the riskiest financial institution in the world. One to watch.
Digga said:
And as if that's not enough, or the French labour refrom crisis, we have both Spain and Portugal facing EU sanctions over budgetary infringements:
http://www.bloomberg.com/news/articles/2016-07-05/...
Classic. What are the EU going to do; fine them for being over budget? That'll help. Perhaps if the French and Germans hadn't already ignored the same budget rules and sidestepped the sanctions of the Stability and Growth Pact then they'd have some grounds for punishing our fiscally wayward Iberian friends.http://www.bloomberg.com/news/articles/2016-07-05/...
Mr-B said:
Condi said:
There is an interesting article on the BBC site about how much Deutschbank is actually worth. Its shares have gone down by 70% this year!
I had heard/read somewhere that DB is in a worse state than Lehman Bros were just before they went bust. Also one of the top guys at Lehman made a statement about how stable the company was, assets realistically priced, blah blah etc and 5 days later filed for Bankruptcy. Recently DB's CEO made a similar comment that the bank is is a strong position to grow it's cash reserves organically and they do not need a capital injection.... hhhmmm. The IMF have also labelled DB the riskiest financial institution in the world. One to watch.
Mario Draghi is not happy today either. He is cross with the police in Slovenia who have had the temerity to raid the offices of the Central Bank. All to do with a Eu257 million scam. Anyway the folks in charge at the ECB are getting very hot under the collar about things, ranting about taking legal action against the police. I trust Inzpektor Knakkaja of the Jard will not be intimidated by such threats. Oh happy days!
https://euobserver.com/justice/134243
Andy Zarse said:
Never believe anything until it is officially denied.
Mario Draghi is not happy today either. He is cross with the police in Slovenia who have had the temerity to raid the offices of the Central Bank. All to do with a Eu257 million scam. Anyway the folks in charge at the ECB are getting very hot under the collar about things, ranting about taking legal action against the police. I trust Inzpektor Knakkaja of the Jard will not be intimidated by such threats. Oh happy days!
https://euobserver.com/justice/134243
Oooh I wonder what Draghi and his friends have to hide...Mario Draghi is not happy today either. He is cross with the police in Slovenia who have had the temerity to raid the offices of the Central Bank. All to do with a Eu257 million scam. Anyway the folks in charge at the ECB are getting very hot under the collar about things, ranting about taking legal action against the police. I trust Inzpektor Knakkaja of the Jard will not be intimidated by such threats. Oh happy days!
https://euobserver.com/justice/134243
Mr-B said:
I had heard/read somewhere that DB is in a worse state than Lehman Bros were just before they went bust. Also one of the top guys at Lehman made a statement about how stable the company was, assets realistically priced, blah blah etc and 5 days later filed for Bankruptcy. Recently DB's CEO made a similar comment that the bank is is a strong position to grow it's cash reserves organically and they do not need a capital injection.... hhhmmm. The IMF have also labelled DB the riskiest financial institution in the world. One to watch.
Ultimately Lehman went bust due to their reliance on short term (overnight funding). A pre default fire sale & haircut ramping (and contagion effect) killed off their ability to fund themselves. Its not the same thing. Its why we have something called Liquidity Coverage Ratio. It'll be IFRS9 that does in DB.
GoodOlBoy said:
My opinion is that the common currency was primarily introduced as a tool to "force" further integration.
So keen were the federalists to get the common currency in place that they turned a blind eye to it's fundamental deficiencies. Their assumption being that once it was up and running total political and fiscal union wouldn't be far behind at which time they could put things straight.
To admit that they were wrong at this stage doesn't seem to be an option they're prepared to take, they have too much political capital invested. Hence their continued and flawed financial support.
Almost but not quite. It's actually worse. They knew it would cause a huge crisis but were banking on that crisis forcing public opinion to call for greater integration, fiscal union and political union.So keen were the federalists to get the common currency in place that they turned a blind eye to it's fundamental deficiencies. Their assumption being that once it was up and running total political and fiscal union wouldn't be far behind at which time they could put things straight.
To admit that they were wrong at this stage doesn't seem to be an option they're prepared to take, they have too much political capital invested. Hence their continued and flawed financial support.
I heard that from Delors himself.
H
fblm said:
Digga said:
And as if that's not enough, or the French labour refrom crisis, we have both Spain and Portugal facing EU sanctions over budgetary infringements:
http://www.bloomberg.com/news/articles/2016-07-05/...
Classic. What are the EU going to do; fine them for being over budget? That'll help. Perhaps if the French and Germans hadn't already ignored the same budget rules and sidestepped the sanctions of the Stability and Growth Pact then they'd have some grounds for punishing our fiscally wayward Iberian friends.http://www.bloomberg.com/news/articles/2016-07-05/...
stongle said:
Mr-B said:
I had heard/read somewhere that DB is in a worse state than Lehman Bros were just before they went bust. Also one of the top guys at Lehman made a statement about how stable the company was, assets realistically priced, blah blah etc and 5 days later filed for Bankruptcy. Recently DB's CEO made a similar comment that the bank is is a strong position to grow it's cash reserves organically and they do not need a capital injection.... hhhmmm. The IMF have also labelled DB the riskiest financial institution in the world. One to watch.
Ultimately Lehman went bust due to their reliance on short term (overnight funding). A pre default fire sale & haircut ramping (and contagion effect) killed off their ability to fund themselves. Its not the same thing. Its why we have something called Liquidity Coverage Ratio. It'll be IFRS9 that does in DB.
There is no doubt in my mind that the challenges now facing the EU are deeply serious. Given the evidence to date the EU approach will be to suggest 'lets all pretend ths is not happening and we will join hands and sing NA,NA,NA,NA,NA.NA. until it all goes away. Cloud Cuckoo Land!
Seriously, this really is beyond the capacity and ability of the EU itself. If the EU was ever capable of actually managing ANY of these challenges, then they would already have devised and introduced the changes needed to sort this out. The EU collectively really has become a chocolate tea pot. Utterly useless.
If the EU were capable of resolving any of these deeply serious fundmental challenges then they would never have got to this perilous position! But they have and we are where we are. QE is not going to assist the EU in this, since confidence in the institutions within the Svereign states are now visibly failing! Hence the worries of the Italian Banks, Deutshebank etc.
These challenges cannot be resolved and repaired by more fudging. It simply will not wash. We can try to estimate how much longer this nonsense can stagger on? Not for long I suggest: there are a lot of examples all around the failing states within the EU.
Our own circumstances could be better. However I do believe that having our own currency does offer us some measure of effective control. I also think that, as more and more concern is expressed in the media concerning the probems facing these institutions within the EU States, confindance will steadily drain away. The real problem lies in the whole ediface of the EU, the huge cost of the EU and the total ineffectiveness of the approach adopted by the EU? Fraudulently throwing QE Euros at totally insolnpvent states can never solve any financial difficulties. There is a huge loss rolling up in this mess and will be hell to pay when this loss is forced upon the remaining states wthin the EU. Who else is there to pay it!
Serious though the challenges are for the UK, itself I do think that, the growing number of calls, within the solvent EU states for a Referendum, are an indication that the trap is sprung. The EU has no way to deal with any of these cases. If they try yet more fudging I think the Ballon really will go up. There are calls for a Referendum in Germany, Sweden, The Netherlands, Norway and so on which the EU can only answer with flowery waffle, promises and platitudes. That is never going to work.
Changes are coming and coming to a significant number of countries. I really believe that the EU has now, shot it's bolt and the organsation is going absolutely nowhere following the UK Brexit decision!
Matter of time but the crunch is coming!
Interesting observations Steffan, et al.
One has to wonder if the Barroso/Rompuy axis, achieving double terms and then running for the hills, probably saw what was coming. Juncker does not come across as a Premier Division player and Tusk is trying but not quite shining through.
I think they may have been set up as the fall guys.
I see Rompuy is making statements about not being able to bepart of the single market without accepting freedom of movement.
https://www.theguardian.com/world/2016/jul/07/herm...
Exactly how does a trade agreement lend itself to social engineering?
On the other hand the reporting is from the Grauniad and they refer to last week's chit chat by the "leaders" of the other 27 EU states as a "summit" which it clearly could not be officially.
As far as I know Turkey is not part of the single market. Nor EFTA.
https://en.wikipedia.org/wiki/European_Economic_Ar...
However when Ford decided to switch production of the Transit to factories in Turkey one assumes that they did not feel they would be disadvantaged by the move. Have sales of Transit declined in the EU market?
Figures for 2013 for the EU seemed to suggest that the Transit, in its market of LCV, had a little over 10% share - about twice the next most popular van range. Somewhat ironic.
And then there is this for 2015.
http://www.statista.com/statistics/247022/registra...
France and UK being by far the largest markets for commercial vehicles especially LCVs. Germany has more registrations for HGVs but is otherwise some way down on France and UK.
Presumably Germany shifts a lot more by rail or uses a lot more "foreign" operators therefore boosting exports?
Are there any significant truck factories left in the UK? If not, can the EU manufacturers, especially German and France and whatever the Italians may have as interest in the Goods Vehicle market, afford not to be trading with the UK?
Meanwhile there are a number of major elections pending in the EU countries in the next year or so.
Who knows what will happen and who will be negotiating month by month.
That comment also applies to the UK.
The UK team is almost guaranteed to be inexperienced and more than likely somewhat lightweight. In fact can anyone think of any true and proven heavyweights who might be available to make our case?
Interesting times all around.
Self interest seems to abound in the Civil Service just as much as in politics. No doubt it has always been thus but kept internal. Now it seems to be more public. Maybe the Servants have a secret admiration for how bureaucratic control has been developed by the EU.
Can you imagine what the back room teams are going to be doing to extend their areas of influence?
Interesting times. Hopefully whatever happens will be somewhat more skillfully managed than Cameron's alleged effort and deliver more useful agreements than he seemed to think he had achieved.
One has to wonder if the Barroso/Rompuy axis, achieving double terms and then running for the hills, probably saw what was coming. Juncker does not come across as a Premier Division player and Tusk is trying but not quite shining through.
I think they may have been set up as the fall guys.
I see Rompuy is making statements about not being able to bepart of the single market without accepting freedom of movement.
https://www.theguardian.com/world/2016/jul/07/herm...
Exactly how does a trade agreement lend itself to social engineering?
On the other hand the reporting is from the Grauniad and they refer to last week's chit chat by the "leaders" of the other 27 EU states as a "summit" which it clearly could not be officially.
As far as I know Turkey is not part of the single market. Nor EFTA.
https://en.wikipedia.org/wiki/European_Economic_Ar...
However when Ford decided to switch production of the Transit to factories in Turkey one assumes that they did not feel they would be disadvantaged by the move. Have sales of Transit declined in the EU market?
Figures for 2013 for the EU seemed to suggest that the Transit, in its market of LCV, had a little over 10% share - about twice the next most popular van range. Somewhat ironic.
And then there is this for 2015.
http://www.statista.com/statistics/247022/registra...
France and UK being by far the largest markets for commercial vehicles especially LCVs. Germany has more registrations for HGVs but is otherwise some way down on France and UK.
Presumably Germany shifts a lot more by rail or uses a lot more "foreign" operators therefore boosting exports?
Are there any significant truck factories left in the UK? If not, can the EU manufacturers, especially German and France and whatever the Italians may have as interest in the Goods Vehicle market, afford not to be trading with the UK?
Meanwhile there are a number of major elections pending in the EU countries in the next year or so.
Who knows what will happen and who will be negotiating month by month.
That comment also applies to the UK.
The UK team is almost guaranteed to be inexperienced and more than likely somewhat lightweight. In fact can anyone think of any true and proven heavyweights who might be available to make our case?
Interesting times all around.
Self interest seems to abound in the Civil Service just as much as in politics. No doubt it has always been thus but kept internal. Now it seems to be more public. Maybe the Servants have a secret admiration for how bureaucratic control has been developed by the EU.
Can you imagine what the back room teams are going to be doing to extend their areas of influence?
Interesting times. Hopefully whatever happens will be somewhat more skillfully managed than Cameron's alleged effort and deliver more useful agreements than he seemed to think he had achieved.
Alexander Dennis, Wrightbus and Optare make buses, Albion still make axles for commercials, DAF HGVs are still being made in Leyland. Dennis Eagle(no relation) make bin lorries. What used to be Bedford make Vivaros. JCB make fastracs which are a bit silly but are more or less HGVs. That's it really unless you include the military/custom end of stuff like Supacat, FPE Ricardo, BAE, etc which is quite a small niche anyway.
QuantumTokoloshi said:
fblm said:
stongle said:
It'll be IFRS9 that does in DB.
Care to explain why? (ze feckers owe me a small fortune)fblm said:
Presumably this is already priced in though no?
Not sure it is, the accounting standard changes are so bloody complex it's difficult to pluck numbers unlike Leverage Ratio. Worst case estimates are a 33% increase in capital to cover LLP (which increase to the total notional rather 12mth expected loss).With these types of changes hitting banks or utilititisation of them, it's difficult to see how monetary policy and QE could ever work in the Eurozone as the correct pricing of risk will run into the hundreds of bps.
Its not the past but the future we have to be scared for - if they get this euro referendum redone and we vote to stay god help us....
Were doing the right thing leaving, the euro zone is disintegrating. it s sinking. and those on board will suffer the most. were off it now. thankfully.
Were doing the right thing leaving, the euro zone is disintegrating. it s sinking. and those on board will suffer the most. were off it now. thankfully.
hidetheelephants said:
The sooner we flexcit our way out from this impending implosion the better.
We're not immune to the Eurozone or Global economy. If or when the balloon goes up UK Plc will get sucked in.As Steffan and others intimate above, the problems faced are so complex and interactions nuanced it's difficult to see out of the quagmire. My strawman solution for the UK would be massive infrastructure investment either via fiscal type measures or a Sovereign Wealth Investment vehicle. All the better to launch soonish given GBPs value (which according to latest news is now spurring on interest at the high end property market). At least Brexit gives us more options to deploy.
Gaining equivalence with EU guidelines would be highly sensible for trade purposes, but probably better out than in (I voted remain but ha!). The ECB has in the past overplayed its mandate with regards to EUR clearing, we successfully overturned them on clearing mandate at the ECJ last year. The worse the situation looks over there, the Brexit position looks strong - BUT we have to capitalise on it. NOW.
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