Is the end nigh for the Euro? [vol. 3]
Discussion
REALIST123 said:
...
When the damage has been done, which it has, and the s
t has already been flung far and wide by the fan, there's no point trying to switch off the fan let alone try to treat the gastric disorder. All that can be done is get on with the clean up and the longer the delay the longer that will take.
...
Is it only a matter of time before banks fail and our savings are at risk?
Atomic12C said:
REALIST123 said:
...
When the damage has been done, which it has, and the s
t has already been flung far and wide by the fan, there's no point trying to switch off the fan let alone try to treat the gastric disorder. All that can be done is get on with the clean up and the longer the delay the longer that will take.
...
Is it only a matter of time before banks fail and our savings are at risk?
Atomic12C said:
New sub-topic....
Could somebody put forward a likely scenario of what may happen if the E.U. and the euro falls apart?
For example :
Week 1 - numerous bank collapses throughout Europe, followed by business collapses and people not given access to their savings. (private savings effectively lost)
Week 2 - mass job redundancies, re-establishment of national currencies, the likes of Italy, Greece and other instantly going 'bankrupt' and defaulting on their national debt repayments.
Week 3 - knock on effects to other banks that hold debts of defaulted countries, a new world economic collapse.....
Would it be something like that?
Or is that TOTALLY off the mark?
Ohhh, that’s a good one. I think your time scales are too long.Could somebody put forward a likely scenario of what may happen if the E.U. and the euro falls apart?
For example :
Week 1 - numerous bank collapses throughout Europe, followed by business collapses and people not given access to their savings. (private savings effectively lost)
Week 2 - mass job redundancies, re-establishment of national currencies, the likes of Italy, Greece and other instantly going 'bankrupt' and defaulting on their national debt repayments.
Week 3 - knock on effects to other banks that hold debts of defaulted countries, a new world economic collapse.....
Would it be something like that?
Or is that TOTALLY off the mark?
Could be measured in hours / days (NOT THAT I THINK A BANK IS GOING BANG TOMORROW)…
Assuming no Govt intervention suspending Capital markets you could bring down the entire financial system globally within 5 days, on a 1-2 bank large default.
Day 1 – Interbank / wholesale funding market dies (other banks start to go) as everyone knows that the banks are riddled with sh*t and COCOS (& other bank debt is going to get bailed in – really sucky if you have a bank account / mortgage tied debt product, like all of Italy). Pre-default haircut ramping pushes remaining peripheral banks under. Asset fire sales start, algo’s give everything a nice downward shove.
Day 2 – European CCPs start to go, margin call will exponentially ramp (post Brexit, on the 24th June LCH called an addition £14bn in intraday variation margin from banks - which is a sh*t ton of money to pull out of your a$$ at short notice). The CCPs depot margin call cash with banks so were f**ked anyway. The decision to centralise credit risk at the expense of liquidity risk is going to be debated on Question Time; but the mongs won’t get it. Bank Liquidity models are going to be rehashed, and the death of prolongation (carry trading) ushered in. Your current account will turn into a 25yr call account (albeit too little too late). Your pension pot is now worth a LOT less, but hey-ho annuity rates might be on the rise. Several Traders arrested after “1 on 1 straightners” with Quants and Risk managers end in manslaughter.
Day 3 – if the lights weren’t out at the ECB; they are now. The sovereign debt bubble is going to mushroom cloud, and an implied 40% recovery rate will look like a win. Ranking Romanian, Italian etc debt pari-passu with Bunds is going to get Draghi arrested on a Ponzi racket and the Bundesbank blitzkriegs in its own men. We’d probably find that Euro Govt debt has the same price floor as equities, FA (not that there is a liquid market for ummm, anything anymore). If any Bank was still alive, BASEL3’s policy of private sector support of sovereign debt bubbles has just killed the last few off as marking their ASF debt / liquid asset books to zero. The last ever Interest Derivative is traded, but the initial margin call bankrupted the firm.
Day 4 – The shops are emptying, visa etc won’t work and a tin of beans is trading above a Porsche 964 RS. If you haven’t cleaned CostCo out of Duracell AAs by now, you’re too late. Rightmove removes the option to search houses above 100k, and introduces price caps in the 100’s of £. Wonga wins everything on Compare the Market.
Day 5 – Shooting down the shops has a whole new literal meaning; Nato 5.56mm & Duracells replace FIAT money. Mexico builds a wall to stop illegal Americans entering.
I strongly doubt we’d make day 6, without someone popping of a nuke or few.
In reality reaching Day 3 without popping a circuit breaker and coordinated govt intervention is very, very unlikely (although not impossible given the stupidity of fractured govts and regulators in the EU). In honesty, I think if 1 or 2 big European banks go tits up, and are NOT preventively recapitilised ALA Monte Del Pashi (which makes a comedy of EU rules anyway particularly Bank Resolution and Recovery Directive); getting well into day 2 is a very real possibility (and we’ve already stared into that abyss on 15/16th Sept 2008). Day 2 is epically bad, but a two bank default could quite easily get us there – looking at Stanleys and Goldmans in Sept 08, prior to TARP was serious bum clenching stuff – and that’s before the regulators screwed the pooch with stupid regulations and the motherload of unintended consequences (Volcker, BRRD, NSFR, CCP etc – all have damaged our ability to deal with a real financial crisis without a govt step in).
In the real world, the Govts would get their sh*t together on day 2 (probably around 14:00 GMT); and by the end of day JPM and Goldman Sachs will own everything (although in 10 years we'll find out they precipitated it - fine in the trillions).
Edited by stongle on Wednesday 15th February 16:55
Edited by stongle on Wednesday 15th February 16:56
Edited by stongle on Wednesday 15th February 16:59
stongle said:
Ohhh, that’s a good one. I think your time scales are too long.
Could be measured in hours / days (NOT THAT I THINK A BANK IS GOING BANG TOMORROW)…
Assuming no Govt intervention suspending Capital markets you could bring down the entire financial system globally within 5 days, on a 1-2 bank large default.
Day 1 – Interbank / wholesale funding market dies (other banks start to go) as everyone knows that the banks are riddled with sh*t and COCOS (& other bank debt is going to get bailed in – really sucky if you have a bank account / mortgage tied debt product, like all of Italy). Pre-default haircut ramping pushes remaining peripheral banks under. Asset fire sales start, algo’s give everything a nice downward shove.
Day 2 – European CCPs start to go, margin call will exponentially ramp (post Brexit on the 24th June vote on LCH called an addition £14bn in intraday variation margin from banks). The CCPs depot margin call cash with banks so were f**ked anyway. The decision to centralise credit risk at the expense of liquidity risk is going to be debated on Question Time; but the mongs won’t get it. Bank Liquidity models are going to be rehashed, and the death of prolongation (carry trading) ushered in. Your current account will turn into a 25yr call account (albeit too little too late). Your pension pot is now worth a LOT less, but hey-ho annuity rates might be on the rise. Several Traders arrested after “1 on 1 straightners” with Quants and Risk managers end in manslaughter.
Day 3 – if the lights weren’t out at the ECB; they are now. The sovereign debt bubble is going to mushroom cloud, and an implied 40% recovery rate will look like a win. Ranking Romanian, Italian etc debt pari-passu with Bunds is going to get Draghi arrested on a Ponzi racket and the Bundesbank blitzkriegs in its own men. We’d probably find that Euro Govt debt has the same price floor as equities, FA (not that there is a liquid market for ummm, anything anymore). If any Bank was still alive, BASEL3’s policy of private sector support of sovereign debt bubbles has just killed the last few off as marking their ASF debt / liquid asset books to zero. The last ever Interest Derivative is traded, but the initial margin call bankrupted the firm.
Day 4 – The shops are emptying, visa etc won’t work and a tin of beans is trading above a Porsche 964 RS. If you haven’t cleaned CostCo out of Duracell AAs by now, you’re too late. Rightmove removes the option to search houses above 100k, and introduces price caps in the 100’s of £. Wonga wins everything on Compare the Market.
Day 5 – Shooting down the shops has a whole new literal meaning; Nato 5.56mm & Duracells replace FIAT money. Mexico builds a wall to stop illegal Americans entering.
I strongly doubt we’d make day 6, without someone popping of a nuke or few.
In reality reaching Day 2 without popping a circuit breaker and coordinated govt intervention is very, very unlikely (although not impossible given the stupidity of fractured govts and regulators in the EU). In honesty, I think if 1 or 2 big European banks go tits up, and are NOT preventively recapitilised ALA Monte Del Pashi (which makes a comedy of EU rules anyway particularly Bank Resolution and Recovery Directive); getting well into day 2 is a very real possibility (and we’ve already stared into that abyss on 15/16th Sept 2008). Day 2 is epically bad, but a two bank default could quite easily get us there – looking at Stanleys and Goldmans in Sept 08, prior to TARP was serious bum clenching stuff – and that’s before the regulators screwed the pooch with stupid regulations and the motherload of unintended consequences (Volcker, BRRD, NSFR, CCP etc – all have damaged our ability to deal with a real financial crisis without a govt step in).
In the real world, the Govts would get their sh*t together on day 2 (probably around 14:00 GMT); and by the end of day JPM and Goldman Sachs will own everything (although in 10 years we'll find out they precipitated it - fine in the trillions).
Absurd analysis that ignores the total financial pandemonium and subsequent coordinated wall of fresh money that will follow a dip in RS prices.Could be measured in hours / days (NOT THAT I THINK A BANK IS GOING BANG TOMORROW)…
Assuming no Govt intervention suspending Capital markets you could bring down the entire financial system globally within 5 days, on a 1-2 bank large default.
Day 1 – Interbank / wholesale funding market dies (other banks start to go) as everyone knows that the banks are riddled with sh*t and COCOS (& other bank debt is going to get bailed in – really sucky if you have a bank account / mortgage tied debt product, like all of Italy). Pre-default haircut ramping pushes remaining peripheral banks under. Asset fire sales start, algo’s give everything a nice downward shove.
Day 2 – European CCPs start to go, margin call will exponentially ramp (post Brexit on the 24th June vote on LCH called an addition £14bn in intraday variation margin from banks). The CCPs depot margin call cash with banks so were f**ked anyway. The decision to centralise credit risk at the expense of liquidity risk is going to be debated on Question Time; but the mongs won’t get it. Bank Liquidity models are going to be rehashed, and the death of prolongation (carry trading) ushered in. Your current account will turn into a 25yr call account (albeit too little too late). Your pension pot is now worth a LOT less, but hey-ho annuity rates might be on the rise. Several Traders arrested after “1 on 1 straightners” with Quants and Risk managers end in manslaughter.
Day 3 – if the lights weren’t out at the ECB; they are now. The sovereign debt bubble is going to mushroom cloud, and an implied 40% recovery rate will look like a win. Ranking Romanian, Italian etc debt pari-passu with Bunds is going to get Draghi arrested on a Ponzi racket and the Bundesbank blitzkriegs in its own men. We’d probably find that Euro Govt debt has the same price floor as equities, FA (not that there is a liquid market for ummm, anything anymore). If any Bank was still alive, BASEL3’s policy of private sector support of sovereign debt bubbles has just killed the last few off as marking their ASF debt / liquid asset books to zero. The last ever Interest Derivative is traded, but the initial margin call bankrupted the firm.
Day 4 – The shops are emptying, visa etc won’t work and a tin of beans is trading above a Porsche 964 RS. If you haven’t cleaned CostCo out of Duracell AAs by now, you’re too late. Rightmove removes the option to search houses above 100k, and introduces price caps in the 100’s of £. Wonga wins everything on Compare the Market.
Day 5 – Shooting down the shops has a whole new literal meaning; Nato 5.56mm & Duracells replace FIAT money. Mexico builds a wall to stop illegal Americans entering.
I strongly doubt we’d make day 6, without someone popping of a nuke or few.
In reality reaching Day 2 without popping a circuit breaker and coordinated govt intervention is very, very unlikely (although not impossible given the stupidity of fractured govts and regulators in the EU). In honesty, I think if 1 or 2 big European banks go tits up, and are NOT preventively recapitilised ALA Monte Del Pashi (which makes a comedy of EU rules anyway particularly Bank Resolution and Recovery Directive); getting well into day 2 is a very real possibility (and we’ve already stared into that abyss on 15/16th Sept 2008). Day 2 is epically bad, but a two bank default could quite easily get us there – looking at Stanleys and Goldmans in Sept 08, prior to TARP was serious bum clenching stuff – and that’s before the regulators screwed the pooch with stupid regulations and the motherload of unintended consequences (Volcker, BRRD, NSFR, CCP etc – all have damaged our ability to deal with a real financial crisis without a govt step in).
In the real world, the Govts would get their sh*t together on day 2 (probably around 14:00 GMT); and by the end of day JPM and Goldman Sachs will own everything (although in 10 years we'll find out they precipitated it - fine in the trillions).
fblm said:
Absurd analysis that ignores the total financial pandemonium and subsequent coordinated wall of fresh money that will follow a dip in RS prices.
Spoilsport, I was trying to pump the value of baked beans. I'm epically long of those with a cupboard full after an Ocado fat finger event (my wife insists she was bidding beans not tins), but not a warehouse full of exotic porkers.I suppose I could auction a tin every now and then (shill bidding) and claim a new visible price to mark my cupboard too. I wonder if there is a bean to tin arbitrage market?
Otherwise, the kids are off the hummus and olives for a bit and onto council food (or maybe it's the other way around).
Edited by stongle on Wednesday 15th February 17:46
Welshbeef said:
Atomic12C said:
But it is our problem as we'd lose a huge export market - so UK economy is hit hard.
So their financial problem is also ours.
My view on it is that for the UK to have prosperous years ahead that we hope will improve our current generations of lives, then we need to find a way of having the UK exit the EU and also promote the continuance of the EU and the euro.
I think a drastic change is needed at the head of the EU. The "ever closer union" is causing the problem as many people are preparing to vote against the loss of their national identity and loss of their sovereign powers.
If for example, a new mission of the EU could be drawn out before Brexit, something along the lines that it will go back to being primarily a trading union rather than a political union, then would that go to solve the impending crisis?
And that would stop BREXIT in one swoop. So their financial problem is also ours.
My view on it is that for the UK to have prosperous years ahead that we hope will improve our current generations of lives, then we need to find a way of having the UK exit the EU and also promote the continuance of the EU and the euro.
I think a drastic change is needed at the head of the EU. The "ever closer union" is causing the problem as many people are preparing to vote against the loss of their national identity and loss of their sovereign powers.
If for example, a new mission of the EU could be drawn out before Brexit, something along the lines that it will go back to being primarily a trading union rather than a political union, then would that go to solve the impending crisis?
bazza white said:
From my understanding a country going belly up isn't the same as a business or person going belly up, a country cannot walk away from the debts just renegotiate them so more of an IVA.
Reason being a debt does with an individualA country lasts into perpetuity.
However if you do default and refuse to pay the debt as a country then you'll struggle to borrow money on the markets. But that isn't really an issue if you can be totally self sufficient- moreso if you owe a debt where even with the best possible tail wind you are looking at 200 years... walk away.
Sorry, this is waaayyy off topic but does seem to suggest something about the decision making abilities of at least some of those who seek forms of power and influence.
Every picture (assuming this is actually related to the news article) tells its own story.
http://www.bbc.co.uk/news/world-europe-38979734
Or so one assumes.
Every picture (assuming this is actually related to the news article) tells its own story.
http://www.bbc.co.uk/news/world-europe-38979734
Or so one assumes.
stongle said:
Spoilsport, I was trying to pump the value of baked beans. I'm epically long of those with a cupboard full after an Ocado fat finger event (my wife insists she was bidding beans not tins), but not a warehouse full of exotic porkers.
Long beans short pork is a horrible trade, your only option at this point is to double up and hope for the worst.Welshbeef said:
Reason being a debt does with an individual
A country lasts into perpetuity.
However if you do default and refuse to pay the debt as a country then you'll struggle to borrow money on the markets. But that isn't really an issue if you can be totally self sufficient- moreso if you owe a debt where even with the best possible tail wind you are looking at 200 years... walk away.
It depends. If you want to remain a part of the international community you selectively default/restructure; Argentina. If you don't give a fvck if you're considered a sub-emerging/frontier economy you default; Cote d'Ivoire.A country lasts into perpetuity.
However if you do default and refuse to pay the debt as a country then you'll struggle to borrow money on the markets. But that isn't really an issue if you can be totally self sufficient- moreso if you owe a debt where even with the best possible tail wind you are looking at 200 years... walk away.
fblm said:
It depends. If you want to remain a part of the international community you selectively default/restructure; Argentina. If you don't give a fvck if you're considered a sub-emerging/frontier economy you default; Cote d'Ivoire.
Take Greece what happens if say 80% of youth emigrate out of Greece and this continues as they see No hope in a future with Geeece. An aging population reduced taxation base things only getting worse what does the govt do? What can it do?Why if you were a citizen of Greece and can see nothing but a hopeless future why not move to another country and start a fresh.
Welshbeef said:
Take Greece what happens if say 80% of youth emigrate out of Greece and this continues as they see No hope in a future with Geeece. An aging population reduced taxation base things only getting worse what does the govt do? What can it do?
Why if you were a citizen of Greece and can see nothing but a hopeless future why not move to another country and start a fresh.
Because you love your country? (Though it would seem many Greeks don't love it enough to pay their taxes). Why if you were a citizen of Greece and can see nothing but a hopeless future why not move to another country and start a fresh.
The Greeks are in this position mainly because they have not, and still are not, prepared to live within their means.
Yes, the Euro/EU hasn't helped. Mainly because they've not been able to devalue and because the EU crack dealer keeps feeding the habits. I also wonder what might have been possible had the EU not taken on other relatively poor nations.
But unless Greece gets a grip of its fiscal policy it will forever be in this sort of problem.
There are salutary lessons for all countries here, including us. We like to put ourselves above such things but overspending is a seriously bad habit and will end in tears for any country insisting on continuing it.
LongQ said:
Sorry, this is waaayyy off topic but does seem to suggest something about the decision making abilities of at least some of those who seek forms of power and influence.
Every picture (assuming this is actually related to the news article) tells its own story.
http://www.bbc.co.uk/news/world-europe-38979734
Or so one assumes.
If you are too thick to figure out locking your frame, rather than a removable part (i.e. wheel) you have no business running anything, ever. What a moron.Every picture (assuming this is actually related to the news article) tells its own story.
http://www.bbc.co.uk/news/world-europe-38979734
Or so one assumes.
fblm said:
stongle said:
Spoilsport, I was trying to pump the value of baked beans. I'm epically long of those with a cupboard full after an Ocado fat finger event (my wife insists she was bidding beans not tins), but not a warehouse full of exotic porkers.
Long beans short pork is a horrible trade, your only option at this point is to double up and hope for the worst.Who says markets are efficient?
Murph7355 said:
Because you love your country? (Though it would seem many Greeks don't love it enough to pay their taxes).
The Greeks are in this position mainly because they have not, and still are not, prepared to live within their means.
Yes, the Euro/EU hasn't helped. Mainly because they've not been able to devalue and because the EU crack dealer keeps feeding the habits. I also wonder what might have been possible had the EU not taken on other relatively poor nations.
But unless Greece gets a grip of its fiscal policy it will forever be in this sort of problem.
There are salutary lessons for all countries here, including us. We like to put ourselves above such things but overspending is a seriously bad habit and will end in tears for any country insisting on continuing it.
Love starts at home with the family. The Greeks are in this position mainly because they have not, and still are not, prepared to live within their means.
Yes, the Euro/EU hasn't helped. Mainly because they've not been able to devalue and because the EU crack dealer keeps feeding the habits. I also wonder what might have been possible had the EU not taken on other relatively poor nations.
But unless Greece gets a grip of its fiscal policy it will forever be in this sort of problem.
There are salutary lessons for all countries here, including us. We like to put ourselves above such things but overspending is a seriously bad habit and will end in tears for any country insisting on continuing it.
If you know your lifetime your kids lifetime and grand kidslifetime and greatgrandkids lifetime is going to be hammered by debt repayment no hope why not move.
Digga said:
True story: Last night, parked 911 in garage (don't normally use it daily, but it'd been detailed) walked dog and then turned my thoughts to dinner. Mrs Digga's working in Paris and, for no apparent reason, the idea of a plain, faff-free dinner appealed, at which point I discovered, we have not a single tin of baked beans. Long pork and totally short on beans.
Who says markets are efficient?
Who'd have thought my wife getting her relative value strategy wrong would result in a short squeeze. I'll happily lend you the beans to cover you're short Vs the Porker as collateral - which seems a very apt metaphor for the ECBs QE and bond buying programs!Who says markets are efficient?
The plight of Greece is a tiny blip on the global scale (but massive if allowed to contagion); in time the actions of the US will do more to shape the Euro economy (certainly FS), than anything coming our of the EC. The cease and desist letter sent to Yellen from the House Committee on FS instructing her to pull out of discussions with FSB etc - is going to shut doors to European funding needs - why the ECB & EC are picking fights with London & the US is a sign of full-on retard. Whats interesting about the letter is 1) its highly protectionist in nature 2) starts to show that the EU playing fast and loose with regs and constant can kicking has opened a potentially unassailable chasm between jurisdictions and regulatory regimes.
http://fortune.com/2017/02/03/read-the-full-cease-...
TBH, I think the journalist has the article a bit wrong - I suspect the US will continue to push for higher capital standards - but seek to slacken off on the onerous end of regs. I don't think the EU has a Scooby which way to go.
stongle said:
Who'd have thought my wife getting her relative value strategy wrong would result in a short squeeze.
I'd have sworn we had at least one tin of beans left...stongle said:
http://fortune.com/2017/02/03/read-the-full-cease-...
TBH, I think the journalist has the article a bit wrong - I suspect the US will continue to push for higher capital standards - but seek to slacken off on the onerous end of regs. I don't think the EU has a Scooby which way to go.
That's quite a broadside attack on 'bureacracy', isn't it? I can see the IMF, EU and ECB all being in the crosshairs of this administration.TBH, I think the journalist has the article a bit wrong - I suspect the US will continue to push for higher capital standards - but seek to slacken off on the onerous end of regs. I don't think the EU has a Scooby which way to go.
smifffymoto said:
I'm brain box genius but to me the noises coming from Trumps are America first and sod the rest of you.
That letter certainly reads like it to me. Can America really go it alone with very little thought to the consequences?
I read it as "America first, until we get our sThat letter certainly reads like it to me. Can America really go it alone with very little thought to the consequences?
t together". A very sensible approach IMO. The way humans operate there is no perfect idyll where everyone's a winner. It's easier to achieve that in specific areas (Eg 1:1),but less so on a wider supranational basis. We've been trying that for decades and outcomes are mixed at best.
That does not, in itself, make Trump an isolationist IMO. It may pan out that way, but it's categorically not what I've heard being said...
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff