Tag Archives: Eurozone

Opening Quotes: Resisting Europeanisation

The pressure is on.

Geithner expects lots more.

But lest we doubt it – huge – justifiable? – German resistance remains.

Joseph Joffe (Editor of Die Weit) – FT Editorial:

“When Helmut Kohl went to Maastricht in 1992, he thought he could “Germanise” Europe by imposing fiscal and monetary restraint on the rest. Now, the crisis countries want to “Europeanise” Germany: spend, inflate and pay. Germany must cheapen credit for all and shoulder the risk alone. It all adds up to a moral hazard that will perpetuate the maladies of the eurozone.”

“Berlin has already failed once in “Germanising” the eurozone via fiscal probity and reform. Why would Club Med mend its ways as long as Germany is such a good “europayer”? If it doesn’t, the eurozone can look forward to bankruptcy and decay.”

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Opening Quotes: Breaking The Loop?

The ‘horror’ continues and market feel like they’re stuck in some interminable loop ……

But this feels different. Its feels like we’re in the final spiral.

I was surprised but encouraged by the markets impatience with the Spainish ‘recapitalization’ deal.

Have the fudgers have finally run out of time?

Its horrendously difficult to ‘trust’ these guys ….. but risk-reward tempts.

FT: ‘Backing grows for one EU bank supervisor’

“François Hollande, the French president, is leading calls for the ECB to take oversight of banks and, when necessary, use the new €500bn eurozone rescue fund, the European Stability Mechanism, to buy direct stakes in struggling banks.

Several ECB top officials have publicly backed the thrust of the proposal. Benoît Coeuré, an ECB executive board member, said this weekend “if the ESM could inject capital directly into banks, with strong conditionality and control, this would also help to break the bank-sovereign loop.”

FT: G20 targets growth to restore confidence’
“According to leaked drafts of the communiqué, the G20 will state: “The euro area member states at the G20 will take all necessary policy measures to safeguard the integrity and stability of the euro area, including the functioning of financial markets and breaking the feedback loop between sovereigns and banks.”
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Opening Quotes: Two Tail Days

From the FT:

“The crisis is deteriorating at an ever-increasing pace,” said Mark Schofield, a senior strategist at Citigroup. “Investors are increasingly pricing in either of the two tail risks – full eurozone break-up or fiscal union.”


Its as simple and horrendously complicated  as that.

I find myself torn between wanting to believe Barroso’s ‘very big step <forward>’ is close …….

Whilst sensing we need another – genuinely traumatic – event to breakdown the final barricades of resistance.

Crisis fatigue is creeping across the screens.

Can the eternal ‘fudging’ last much longer?

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Opening Quotes: ‘Here Come The Historians’

Thoughtful article comparing the events that precipitated the collapse of the ‘Rouble-zone’ with the EU.

Ending the week disappointed with rhetoric surrounding the Spainish banking recapitalizations & prospective deposit guarantee scheme – I think the core is the problem.

It was never going to be easy, but I sense – once more!? – the markets <relief> rally has inadvertently endorsed ‘the fudgers’ self-confidence.

Back on the defensive until the crisis takes another – deeper – twist.


The lesson for the EU is that it should be watching closely what Germany is doing, and be wary of calls for a smaller euro zone, or a “two-speed Europe,” Krastev said. Unions don’t break up because of troubles in peripheral countries, they break up from the core, he said.

“Disintegration doesn’t occur because everyone wants to go their own way,” said Krastev at the think-tank in Bulgaria. “It happens because politicians envisage a closer, optimal union. This crisis is already reducing the borders of solidarity. The EU space is going to be renegotiated.”

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Opening Quotes: Putting in the FIX

For me the critical feature of this, apart from its absolute necessity,  is that it could be done.

And for ‘the creditors’ – it’s a cheaper option than getting dragged towards underwriting Eurobond issuance.

FT Editorial: ‘Banking Union and the Euro’s Future’

The fixes the eurozone needs may be less radical than feared. The near-term priority must be to avoid bank runs. A sovereign debt crisis becomes devastating if it is allowed to bring down the banking system. When this happens, the entire economy suffers a cardiac arrest.Perhaps the best way out now is to sever the link between the sovereign and the banking system by moving to a eurozone-wide banking union.

True, this would involve a substantial pooling of sovereignty, albeit less than what would be required for full fiscal union. But it should be sufficient to stabilise the currency area. It would, for instance, make it easier to let over-indebted states such as Greece default within the eurozone rather than be forced out.

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Opening Quotes: Optimistic Symmetries

I blame Wednesday’s ‘ESM-Bank Recapitalization’ balloon, but – in the face of horrendous $SPX price action – last week I found myself becoming way more optimistic about Europe.

I wrote about the ‘why’ last week – and please be careful as I’ve a desperate (& painful) habit of getting on the right side of the ‘macro strory’ before the technicals fall into line  ……

But this morning I unexpectedly found my favorite <long-time uber bear> Eurozone commentator offering a similarly <surprising optimistic> analysis.

It is now or never (again?) but – from an Irish perspective – I absolutely believe the seeds of the Eurozone crisis were sown in the everyone for themselves botched response to the Lehman collapse in September 2008.

Huge problems remain, but any sort of fully fledging BANKING UNION would be a seriously BIG DEAL and more importantly  – its ACHIEVABLE!!

Wolfgang Munchau (FT):

“Unlike six months ago, officials now realise there is no alternative to a banking union. The biggest danger now is that eurozone leaders change their minds. Ms Merkel has not made the case back home. A proper banking union would come as a shock to many Germans, including those in the media. It is still easier to be a pessimist, but I am not yet quite ready to give up what will probably be the last chance to save the euro.”

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Opening Quotes: The Chief Iconoclast


If nothing else – ever the iconoclast.


“We have zero interest rates,” Taleb said. “If interest rates go up in the United States, you can imagine what the deficit would be. Europe is like someone who is ill but is conscious of it. In the United States we are ill, but we don’t know it. We don’t talk about it.”

Europe’s lack of a centralized government works in its favor, he said.

“The best thing Europe ever did is managing to have members bickering with each other, so you don’t have the big government,” Taleb said. “Centralized government doesn’t work. In Europe they tried to have a powerful Brussels, but what happens when you have a powerful Brussels? You have lobbies hijacking Brussels.”

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Opening Quotes – They would wouldn’t they?


“Italy’s Prime Minister, Mario Monti, told Italian television station La7 yesterday that the majority of European Union leaders at a Brussels meeting this week backed joint euro- area bonds. He added that Italy can help persuade Germany to support Europe’s “common good” as well.”


Well ….. they would wouldn’t they?

Whatever else happens – and the market unshakable (somewhat justified?) belief in the ‘Central Bank Put’ keeps the equity market bears at bay – EuroBonds?

See yesterday’s post – they can’t even ‘discuss’ pan-European deposit guarantees &/or bank recapitalizations.




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Opening Quotes – The Great Greek Swindle


After the bailouts and PSI ‘voluntaty’ write-downs – guess who owes Greece?

We (European taxpayers)do.

The ‘private sector’ – the euro-zone banks et al – are long gone.


Of Greece’s 266 billion euros ($346 billion) of debt, about 194 billion euros — or 73 percent — is held by the European Central Bank, euro-area governments and the International Monetary Fund, according to the Greek Debt Management Office in Athens. In 2010, before the first bailout, Greece owed about 310 billion euros, all to the private sector.

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Opening Quotes: Job Done?

Austerity bites. Governments continue to fall.

And the ECB has ‘done its job.’

We’ll see.

Bundesbank President Jens Weidmann:

“We shouldn’t get so excited about bond yields rising for a limited period of time,” Weidmann said. “They also constitute an incentive to reform, to embark on consolidation.”

The ECB, which has pumped more than 1 trillion euros ($1.3 trillion) into the banking sector since December in a bid to avert a credit crunch, has “done its job,” Weidmann said. Weidmann added that governments must now press on with budget cuts and structural reforms to encourage economic growth.

“It’s important to get the message to governments, ‘this is your job now,’” Weidmann said.



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