Investors in Europe: "Yoiks! Let's get outta here Scoob!"

sandbagger · Nov 20, 2011

Is this the end of the European Union? Will Nicholas Sarkozy discover Carla's dark secret? Will Silvio Berlesconi's new found pop stardom destroy his relationship with his new seventeen year old mistress or will their love last?

Europe Fears a Credit Squeeze as Investors Sell Bond Holdings

Nervous investors around the globe are accelerating their exit from the debt of European governments and banks, increasing the risk of a credit squeeze that could set off a downward spiral.

inancial institutions are dumping their vast holdings of European government debt and spurning new bond issues by countries like Spain and Italy. And many have decided not to renew short-term loans to European banks, which are needed to finance day-to-day operations.

If this trend continues, it risks creating a vicious cycle of rising borrowing costs, deeper spending cuts and slowing growth, which is hard to get out of, especially as some European banks are having trouble meeting their financing needs.

“It’s a pretty terrible spiral,” said Peter R. Fisher, head of fixed income at the asset manager BlackRock and a former senior Treasury official in the George W. Bush administration.

The pullback — which is increasing almost daily — is driven by worries that some European countries may not be able to fully repay their bond borrowings, which in turn would damage banks that own large amounts of those bonds. It also increases the already rising pressure on the European Central Bank to take more aggressive action.

On Friday, the bank’s new president, Mario Draghi, put the onus on European leaders to deploy the long-awaited euro zone bailout fund to resolve the crisis, implicitly rejecting calls for the European Central Bank to step up and become the region’s “lender of last resort.”

The flight from European sovereign debt and banks has spanned the globe. European institutions like the Royal Bank of Scotland and pension funds in the Netherlands have been heavy sellers in recent days. And earlier this month, Kokusai Asset Management in Japan unloaded nearly $1 billion in Italian debt.
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RickDeckard · Nov 20, 2011

There are rumours about the ECB printing money and giving it to the IMF to distribute, to ensure liquidity, but to guard against too much inflation.

But they need to hurry the fuck up, whatever they decide.

Ancalagon · Nov 20, 2011

RickDeckard said: ↑

There are rumours about the ECB printing money and giving it to the IMF to distribute, to ensure liquidity, but to guard against too much inflation.

But they need to hurry the fuck up, whatever they decide.
Click to expand...

And by 'print money' you mean 'making money appear out of 1s and 0s.'

RickDeckard · Nov 20, 2011

Ancalagon said: ↑

RickDeckard said: ↑

There are rumours about the ECB printing money and giving it to the IMF to distribute, to ensure liquidity, but to guard against too much inflation.

But they need to hurry the fuck up, whatever they decide.
Click to expand...

And by 'print money' you mean 'making money appear out of 1s and 0s.'
Click to expand...

Well, I'm not sure that there's enough paper in the world to physically print €2 trillion.

Ancalagon · Nov 20, 2011

RickDeckard said: ↑

Ancalagon said: ↑

RickDeckard said: ↑

There are rumours about the ECB printing money and giving it to the IMF to distribute, to ensure liquidity, but to guard against too much inflation.

But they need to hurry the fuck up, whatever they decide.
Click to expand...

And by 'print money' you mean 'making money appear out of 1s and 0s.'
Click to expand...

Well, I'm not sure that there's enough paper in the world to physically print €2 trillion.
Click to expand...

You obviously don't have Publisher's Clearinghouse over there.

They can make some REALLY big checks...

Bulldog · Nov 20, 2011

Scooby Doo references should be met with instant scorn and ridicule on WF.

14thDoctor · Nov 20, 2011

Ruh roh!

Rimjob Bob · Nov 20, 2011

[YT="Hitler finds out about the Eurozone crisis"]29F50dGbfM8[/YT]

Bickendan · Nov 20, 2011

Rob Matter said: ↑

[YT="Hitler finds out about the Eurozone crisis"]29F50dGbfM8[/YT]
Click to expand...

Niiiiice. That was probably one of the better Hitler Rants I've seen.

Dr. Drake Ramoray · Nov 20, 2011

sandbagger said: ↑

Is this the end of the European Union? Will Nicholas Sarkozy discover Carla's dark secret? Will Silvio Berlesconi's new found pop stardom destroy his relationship with his new seventeen year old mistress or will their love last?

Europe Fears a Credit Squeeze as Investors Sell Bond Holdings

Nervous investors around the globe are accelerating their exit from the debt of European governments and banks, increasing the risk of a credit squeeze that could set off a downward spiral.

inancial institutions are dumping their vast holdings of European government debt and spurning new bond issues by countries like Spain and Italy. And many have decided not to renew short-term loans to European banks, which are needed to finance day-to-day operations.

If this trend continues, it risks creating a vicious cycle of rising borrowing costs, deeper spending cuts and slowing growth, which is hard to get out of, especially as some European banks are having trouble meeting their financing needs.

“It’s a pretty terrible spiral,” said Peter R. Fisher, head of fixed income at the asset manager BlackRock and a former senior Treasury official in the George W. Bush administration.

The pullback — which is increasing almost daily — is driven by worries that some European countries may not be able to fully repay their bond borrowings, which in turn would damage banks that own large amounts of those bonds. It also increases the already rising pressure on the European Central Bank to take more aggressive action.

On Friday, the bank’s new president, Mario Draghi, put the onus on European leaders to deploy the long-awaited euro zone bailout fund to resolve the crisis, implicitly rejecting calls for the European Central Bank to step up and become the region’s “lender of last resort.”

The flight from European sovereign debt and banks has spanned the globe. European institutions like the Royal Bank of Scotland and pension funds in the Netherlands have been heavy sellers in recent days. And earlier this month, Kokusai Asset Management in Japan unloaded nearly $1 billion in Italian debt.
Click to expand...

Click to expand...

Bulldog said: ↑

Scooby Doo references should be met with instant scorn and ridicule on WF.
Click to expand...

sandbagger · Nov 23, 2011

And then there's this.

German Bond Auction Fails

Effectively, Germany and France and a handful of other tiny countries have to guarantee both the sovereign debt and the bank liabilities of the whole eurozone. Given the holes that recent events have exposed in these systems, can they credibly do that? Even if the Greeks and Italians don't use that guarantee as a blank check to avoid reform?

We may be getting an unhappy answer to that question: a German bond auction went rather badly today. In fact, a lot of commentators are using words like "disastrous". They sold just over half of the €6 billion they had put out to market, the worst such outcome anyone can remember. This comes on the heels of a Spanish debt auction in which the yields on their three month notes more than doubled to 5%. That's a higher interest rate than I pay on my credit card.

I've seen three explanations offered for this:

The market is pricing the euro, not German credit

Bund yields, at 1.98%, are too low to be attractive

European banks are delveraging, depriving the auction of buyers

#2 is actually just a special case of #1--people used to like to buy ultra-low bunds as a safe-haven, and now they don't.
Click to expand...

Ebeneezer Goode · Nov 23, 2011

Looking increasingly likely that Merkel will be forced into Eurobonds, investors are fleeing the Eurozone.

If she resists, then Santa may be in time to see the Euro fall apart.

RickDeckard · Nov 23, 2011

I think they know that they have to federalise the debt, but they're trying to get as much control as possible in return. It's a dangerous game of brinkmanship.

Oxmyx · Nov 23, 2011

Germany wants the common economic policy. By resisting euro bonds again and again, the chancellor is pushing up the price other countries are willing to pay for a euro bond market. Implementing a euro bond market without turning over some sovereignty to a common economic government will result in a disaster.

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Investors in Europe: "Yoiks! Let's get outta here Scoob!"

sandbagger Fresh Meat

RickDeckard Socialist

Ancalagon Scalawag Administrator Formerly Important

RickDeckard Socialist

Ancalagon Scalawag Administrator Formerly Important

Bulldog Only Pawn in Game of Life

14thDoctor Oi

Rimjob Bob Classy Fellow

Bickendan Custom Title Administrator Faceless Mook Writer

Dr. Drake Ramoray 1 minute, 42.1 seconds baby!

sandbagger Fresh Meat

Ebeneezer Goode Gobshite

RickDeckard Socialist

Oxmyx Probably a Dual

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