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Italian default is in the picture and the core may not be able to bail out the periphery if its borrowing costs rise by too much.
Italian default is in the picture and the core may not be able to bail out the periphery if its borrowing costs rise by too much.
sell off?
who is buying?
http://www.ft.com/cms/s/0/c9efa9fe-0...#ixzz1dtEPbvS9Traders said there were few buyers in many bond markets, with only the European Central Bank active in Italy and Spain. “It is really scary,” said one at a US bank. “Everyone is liquidating in the eurozone bond markets ... Everyone is heading for the door.”
ECB, apparently.
Looking like the ECB gets to hold one big bomb instead of everyone else having a bunch of smaller ones. Can't decide whether or not that's a good thing, "good" being a relative term of course..............
http://www.dailymail.co.uk/news/arti...#ixzz1dtXELvMsThe yield on French government bonds climbed to 3.63 per cent. With the German equivalent at just 1.75 per cent, the difference between what it costs Paris and Berlin to borrow is at its highest level since the euro was established in 1999.
And an influential report added to market nerves with a claim that the French economy is the 17-member eurozone's second biggest but only the 13th healthiest.
The Lisbon Council think tank and Germany's Berenberg Bank rates France one rank above Italy, and one below Spain.
'Alarm bells should be ringing for France,' said Holger Schmieding, Berenberg's chief economist.
Those bells might also ring, however, for the triple-A rated countries Austria, Finland and the Netherlands, which also saw bond yields worryingly.
Stocks take a hit after Fitch warnings on US bank exposure
The Dow dropped 190.57 points to close at 11905 after Fitch ratings released a report saying that US banks could be "greatly affected" if Europe's debt crisis continues to spread
http://www.csmonitor.com/Business/La...All+Stories%29
http://www.bloomberg.com/news/2011-1...itch-says.htmlThe six biggest U.S. banks -- JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc. (C), Wells Fargo & Co. (WFC), Goldman Sachs Group Inc. and Morgan Stanley (MS) -- had $50 billion in risk tied to the GIIPS on Sept. 30, Fitch said. So-called cross-border outstandings to France for all except Wells Fargo were $188 billion, including $114 billion to French banks. Risk to Britain and its banks was $225 billion and $51 billion, respectively.
ibidThe Fitch report is a worst-case scenario and is "oddly out of step" with the rating company’s previous reports, analysts at HSBC Holdings Plc said today. U.S. banks may even benefit as investors shift money to the U.S. from Europe, HSBC said.
Investor demand for the relative safety of Treasuries during the European debt crisis has sent the difference between U.S. short-term yields and bank rates surging to levels not seen in more than two years.
ibidWhile U.S. banks have hedged some of their risk with credit-default swaps, those may not be effective if voluntary debt forgiveness becomes “more prevalent” and the insurance provisions of the instruments aren’t triggered, Fitch said in the report. The top five U.S. banks had $22 billion in hedges tied to stressed markets, according to Fitch.
Disclosure practices also make it difficult to gauge U.S. banks’ risk, Fitch said. Firms including Goldman Sachs and JPMorgan don’t provide a full picture of potential losses and gains in the event of a European default, giving only net numbers or excluding some derivatives altogether.
Guarantees provided by U.S. lenders on government, bank and corporate debt in Greece, Italy, Ireland, Portugal and Spain rose by $80.7 billion to $518 billion in the first half of 2011, according to the Bank for International Settlements.
Part of me is hoping so much that big banks eat it hard on the CDS side. I have no idea the large picture ramifications of that, I just want it to happen.
creative destruction is both
Welcome to the dark side.
I want to see them fall and fall hard. I really am so angry at what that group of companies did to the world and I think the only way to stop them is through their own doing. Even if it means we all suffer I think its better in the long run.
Welcome to the dark side.
When I supported the bailouts, I did so under the hope (and maybe the extremely naive hope) that there would be large scale changes done through forced legislation as a result. Now that I see that is simply an impossibility, I just want to see them fall flat on their face so we can move on.
For my part I hope it goes down like this: insolvent banks go into receivership, get reorganized, and are sold off, regardless of size. Like The S&Ls in the '90s.
The problem is there is only like four major banks now and they are all at risk. Who is going to do the buying?
The banks get parted out into manageable pieces (or shuttered as necessary.) Isn't that basically what a resolution authority does?
Unfortunately in practice it works opposite of that. Just look at the shotgun weddings the Fed arranged in 2008. (example, JP Morgan and Chase, Wells Fargo and Wachovia, BOA and Countywide, etc.)
Hastily concluded mergers to promote market stabilty don't really compare to an RTC-like bridge corporation laying about with hammer and tongs. How we dealt with it in the 1990's is still relevant.
lol @ CC thinking there'll be no buyers for American banking
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