End game Europe approaching.

Hard to believe the Spiegel didn’t quote Phil Prendergast.

Is that a green light for Ireland to throw the bank debt back at the ESB? Good luck to the Lenny’s Guarantee……. 8DD

ESB?

Yes. The debt will be added to your next ESB bill. I’m not even joking.

Woops. I was close enough then… :-GC

Interesting article in the Times covering a lot of the angles :

google.ie/search?q=Google+ne … fdc157aca2

Geithner heads to Europe as debt fears mount → reuters.com/article/2011/09/ … 4R20110912

Uh, is this the same Geithner who nailed Ireland’s goolies to the austerity table when we were looking for “backing” from the IMF? I presume he’s talking about “backing” the little countries into a corner where it’ll be easier to squeeze the pips. 8-

Geithner has more sway in Europe than most members of the EU. Poland & co. are rightly pissed off with the way this whole thing has panned out. Poland happens to be the only member state not in recession in 2009, but aside from that they’ve seen the true dominance of the Franco-German axis unveiled, along with the influence of external forces in Washington.

No wonder they are backing away from earlier commitments to join the single currency. It’s not a very attractive club to join. On top of the instability, they must all now see that Berlin runs the show.

More…

The US Treasury is the largest shareholder in the IMF, who have put up 33pc of the bailout funds to date. Geithner is entitled to have a view on the bailouts. Why the IMF got involved in subsidising lame European solutions is a mystery.

The Tea Party will make a lot of political capital out of this if the bailouts collapse and the IMF loses money. Recapitalising the IMF would be a disaster for the Democrats in 2012.

THEORY: Merkel Will Press Obama And The Fed To Help Bail Out The Eurozone → businessinsider.com/merkel-w … one-2011-9

Why doesnt the media mention the only reason Geithner doesnt want a greek default is so the US banks can avoid having to pay up on the CDS they sold to the European banks

+1 that’s my suspicion too. Indeed, it is a particular state owned insurer that I believe the concern lies with…

+2

And how much of the lending would have happened in the first place if not for the zero-risk illusion created by the legacy of past bailouts? Why worry about your counterparty if the Treasury/Fed have decided that they’re too-big-to-fail?

Now we find out who or what is too-big-to-save.

telegraph.co.uk/finance/chin … escue.html

China is willing to play the white knight for Europe - but it wants hard assets, not bonds.

But the bonds would be backed by the full faith and credit of the Italian government, wouldn’t they?

So where’s the problem… :smiley:

These Chinks need to learn how to play the game! Hard assets, pffff…

The ECB appears to be starting to go the way of many retail banks. Quality deposits are leaving and the ECB (and by extension the european taxpayer) is being left with the Cr*p. Where have we heard this before?

bloomberg.com/news/2011-09-13/deposit-flight-from-european-banks-means-collateral-risk-piling-up-at-ecb.html

It is a further impediment to the issue of eurobonds methinks.

It’s not just the ECB - the United States is on the hook, as evidenced by Geithner personally coming over to talk to national governments about the line of credit they’ve extended. Personally, I am starting to get a little fearful again. Just about every major economy in the world is now acting as lender of last resort towards failed financial institutions. It’s certainly no exaggeration to say that a sudden Greek default could act as a Lehman-type event which could cause a cascade of write-downs and insolvencies. The difference between now and 2008 is that all the ammunition of lowering interest rates, pumping liquidity into the market, etc. has all been used. It’s easy to see why gold is appealing - the only solution is a depression, or heavy inflation.

Watched a very good interview on CNBC. The Anchor was saying surely we in the US have nothing to worry about as the banks have come out and said they have tiny exposures to Europe.
The guy said they are treating exposure as the difference between the loans they held and the insurance they bought on them. He followed on that everyone can see that Greece is the Lehmans. He said the question is “Who is the AIG this time?”. He also went onto say that even if the protection wasn’t issued by one big company but lots of small ones that as they start folding due to now being able to meet their obligations then the banks are left with the losses and hey presto, distrust and a freezing up of the world financial system once more.

Makes a lot of sense to me but then again I’m not in banking, the darkest of dark arts.

Em… isn’t it AIG this time too?

Nate

Nope. Have not seem the numbers for a while but it think you’ll find Soc Gen and DB subsidiaries are pretty high on the list of net exposure on CDS like instruments on Euro zone bonds. Its not the Greeks or PIIGS they are worried about. My guess is it will be the increased collateral requirements on the inevitable downgrade cascade on other euro zone country bonds and related derivative instruments. Its collateral cash calls that finally killed AIG, Lehmans et al and increased collateral calls can come from the most unexpected directions. I dont think anyone is quite as naked as AIG was in 2008 but I suspect there is no more cash to cover a major collateral cash call. The cheapest solution by this stage is have the credit event, net out all the positions and for the ECB to stump up the 10B or 20B to cover the net losses. And then dont let the bastards write any more contracts on margin and have weekly collateral adjustments on all open positions.