Merkel, Sarkozy reach agreement on bank sector

Coyn

Up or down for PM?

Up or down for Equities??



Not that anyone believes these BS releases or that they will fix any problems. However, Institutional Investors trade on perception not reality so they will act as if this means something.

AUandAG

I don't understand the bailing out of Greece and Italy. Just because they are part of the Euro or do the Germans
and French think of them as just another State of Euorpe?
Why don't they let the chips fall where they may? What is the downside to Germany and France. Just can't get
my head around this.


"(German Chancellor Angela Merkel says she and French President Nicolas Sarkozy "are determined to do the necessary to ensure the recapitalization of Europe's banks.")"

bob

Coyn

Greece owes the money mostly to French banks.No one gives a >>>about Greece. Like always this is a bailout of the banks who lent the money. They control the politicians.

Goldman Vet Named Euro Central Bank Chief


http://www.rollingstone.com/politics/blogs/taibblog/goldman-vet-named-euro-central-bank-chief-20110624

Goldman Sachs people own most of the people who make the decisions in most Central banks of the world. This is not about Greece its about the money elite.

DoubleEagle59

Germany will never let Greecs default.

Why?

Because Germany is the largest creditor nation denominated in Euros.

If they let Greece default, then Germany will lose more money (never getting paid back in Euros, or being paid back in 'worthless' drachmas) than if they bailed them out.

Same goes for other in deby countries, such as Italy, Portugal and Spain.

MsMorrisine

yeah, and there is the domino theory.

the PIIGS (portugal, italy, ireland, greece, spain) are under the debt magnifying glass.

they are trying to establish a renewed sense of security in europe via shoring up the most troubled member, greece.

the fear is that if greece fails, it will bring probably spain and italy up next, and they can't bailout italy like they can greece. italy is too big.

not only are they trying to ward off bank failures they are also trying to ward off a depression caused by these countries failing. It's kind of like when we saved other banks after lehman broke.

and the feeling was as was put in one of my earlier polls (screwed if we do: bail out == more of the same: debt... and scerwed if we don't: multiple failures and fear of the unknown. they are choosing more of the known, debt, than the fear of the unknown.)

However, I think a lot of us are getting sick of being held hostage by this seemingly unfixable crisis and see the "haircuts" that are being agreed to by the private sector as technical default, and we think they should just go ahead and admit default and default to get it over with.) Perhaps Spain, Italy and the others will be more clued and learn from the Greece "lesson." If you're trying hard and not succeding, try harder. (plus there are some doubts about greece actually trying hard)

MsMorrisine

<< <i>Up or down for PM?

Up or down for Equities??



Not that anyone believes these BS releases or that they will fix any problems. However, Institutional Investors trade on perception not reality so they will act as if this means something. >>




I'm thinking up for equities. or at least in the neighborhood of flat, considering the rallies we've had the past week.


PMs? When do they get re-focused on US debt? Anyway, if equities go up, the dollar may fall and that could be a + for PMs... but the added "security" might be a - for PMs. So, I'm not sure.

I have been thinking gold and silver may drop more on a positive Greece resolution. However, I'd be buying then because the US debt and deficit problem is much much harder to fix than the Greece debt problem.

(heh. the politicians are only talking of "reducing the deficit" right now. like that's a good thing???????? morons.)

derryb

<< <i>I don't understand the bailing out of Greece and Italy. Just because they are part of the Euro or do the Germans
and French think of them as just another State of Euorpe?
Why don't they let the chips fall where they may? What is the downside to Germany and France. Just can't get
my head around this. >>


Because the failure of Greece and Italy to pay their sovereign debt (loans/bonds) will land on German, French and US banks who hold the debt. Think of it as a bailout for the banks outside of Greece and Italy (and comming soon, Spain, Portugal and Ireland - the PIIGS). Its the european version of too big to fail banks consuming taxpayer production. The US is caught up in the assistance as well - gotta protect Wall St. from their own bad investment decisions. Spain will be the one that really knocks them to their knees.

Soverign debt (that of a country) only has to be paid back if the country wants to pay it back. If they don't they only lose their credit rating to borrow more. It's not like the car or the house will get repossessed. With bailouts the citizens have to make concessions dictated by the IMF (bood sucking tick) and other loaning ticks in the form of higher taxes, lower retirement, etc. The best thing these countries could do for their citizens is to say "sorry, don't have the money to pay you back but here's a dime for every dollar we owe you." The loaning banks really have no recourse. Greece and Italy could then restart their own economy from within (and even with each other's help) but would not be able to rely on any future loans from outside banks. They could even start their own "Union of the Defaulted" with its own currency.

Unlike the US, european union members are unable to print their way out of this crisis. They gave up that privilege when they joined EU and settled for a common currency controlled by the EU.



<< <i>Up or down for PM?
Up or down for Equities?? >>


Bailouts would temporarily solve each country's financial crisis. This would be good for US equities (calm the markets), especially stocks of US banks that would suffer if there was default. It should weaken the dollar (current temporary safehaven for those in fear of the euro) which should strengthen PMs. But remember, bailouts are only gonna solve things temporarily, and bigger bailouts are going to be needed later for bigger economies such as Spain. Europe is simply following the US's experiment in bank bailouts. The correct resolution is to allow controlled default and force the banks that bought the bad bonds to take a haircut. Until banks/funds/individuals worldwide are left to suffer the consequences of their bad investments this soverign default problem is just going to move from country to country until all money becomes worthless.

cohodk

What was the agreement?

Reminds me of Al Gore when he said, "I have a plan." Still havent heard any details.

Meltdown

<< <i>What was the agreement?

Reminds me of Al Gore when he said, "I have a plan." Still havent heard any details. >>



Nobody knows just yet. Here's a quote from the AP this afternoon...



<< <i>The governments of France, Belgium and Luxembourg said Sunday they had approved a plan for the future of embattled bank Dexia, but they offered no details.
In a three-sentence statement issued by the Belgian prime minister's office, they said they supported a proposal by the bank's management that will be submitted to its board of directors. The board is scheduled to hold a crisis meeting Sunday afternoon in Brussels amid reports that the bank might be split up.
The government statement said the "suggested solution" had been "the result of intense consultations with all partners involved" >>

derryb

Confusing Array of Conflicting Same-Day Headlines About Greece, Troika, Defaults

"I am sure glad that's cleared up." - MISH

BigE

These Europeon leaders have way too many ways of saying "We'll worry about it later"-------------------BigE

roadrunner

I wouldn't give France a pass in the debt walk. Their banks are essentially just as much zombies as everyone else.

roadrunner

jmski52

If these countries (banks) have run up this magnitude of unpayable losses to date, what makes Germany so sure that they will not only "turn things around" but turn things around to the extent of being able to ever pay back anything?

duh.

MsMorrisine

<< <i>If these countries (banks) have run up this magnitude of unpayable losses to date, what makes Germany so sure that they will not only "turn things around" but turn things around to the extent of being able to ever pay back anything?

duh. >>




fear of the devastation and depression . they are going with the known (more debt) versus the unknown.

derryb

European banks begining to fall


Egypt joins the party

renman95

Do they really think we are going to believe that Merkel and Sarkozy have it all figured out and this debacle won't be revisited? The European implosion is imminent. I'm sure they have financial skeletons like our one time audit of the Federal Reserve that revealed $16T in bailouts. Who's on the hook for that again?

derryb

The way a soveriegn default shoud be handled:

Haircuts for alll

Let the risk takers eat some risk