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 Post subject: Back again
PostPosted: Tue Jun 28, 2011 12:48 am 
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Governments across the single currency bloc are pushing the banks, pension funds and insurance firms that hold Greek sovereign debt to play a role in a second rescue package for the heavily indebted euro zone nation. Josef Ackermann cautioned against any steps that could spread the crisis to other vulnerable countries in the 12-year old currency bloc.

"If it is Greece alone, that's already big. But if other countries are drawn in through contagion, it could be bigger than Lehman," the Deutsche Bank chief said at a Reuters banking event on Monday.

View full article here

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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 1:17 am 

Joined: Tue Nov 30, 2010 12:37 pm
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Interesting that l can't find hardly anything on the MSM regarding the General Strike in Greece today and tomorrow. More so seeing that Greek Air Traffic Controllers are on strike too causing flights to be cancelled all over the EU. Easyjet alone has 6 flights cancelled for today.

Greek politicians are in for a torrid time from their people and god knows what these people will do if these politicians vote for these extra austerity measures. l know what l hope they'll do! :lol:


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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 2:22 am 
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Very much my point, if Enron executives went to prison for knowingly propping up a bankrupt business with their client's money how can it is legal, or prudent, for a business to throw their client's money into a buying bonds from a state they know is already insolvent? Their shareholders should send round Mr Plod to have a word with them about what they think they are doing.

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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 8:31 am 
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SmokingHot wrote:
Interesting that l can't find hardly anything on the MSM regarding the General Strike in Greece today and tomorrow. More so seeing that Greek Air Traffic Controllers are on strike too causing flights to be cancelled all over the EU. Easyjet alone has 6 flights cancelled for today.

Greek politicians are in for a torrid time from their people and god knows what these people will do if these politicians vote for these extra austerity measures. l know what l hope they'll do! :lol:


It's rather like reporting that the sun is shining ... but our London MSM don't do foreign.

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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 8:59 am 

Joined: Sun Aug 29, 2010 6:09 pm
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Can anyone provide some enlightenment regarding the IMF; what is its purpose and what would happen if it didn't exist. In my limited understanding, it serves no purpose and appears to be part of the problem rather than offering credible solutions. And why are we, the UK, a member, would we be worse off if we weren't?


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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 9:18 am 

Joined: Tue Nov 30, 2010 12:42 pm
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I wonder if the Greek parliament vote no to the austerity package will they be given another chance to vote the correct way, as in Ireland re Lisbon?
re the coverage there was a small item on radio 4 this morning, Peston wrote a piece on the BBC website about French proposals to extend the payback period, but that didn't get a mention: http://www.bbc.co.uk/news/business-13924950


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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 9:29 am 

Joined: Sun Aug 29, 2010 8:50 pm
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The EU and ECB are not concerned with illegality. Christine Lagarde has already admitted that the bail outs were illegal in the first place. What does it matter if you sweep regulations under the carpet when you are amongst friends?


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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 9:33 am 

Joined: Tue Sep 12, 2006 3:27 pm
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Plenty of coverage on Sky and BBC 24 now. It seems that when there are live pictures, that is something worth reporting. Just boring old words won't cut it. Even if the live coverage is people holding up banners most Brits can't read.


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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 9:51 am 

Joined: Tue Aug 02, 2005 12:15 am
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Location: Brussels, Belgium
Julian Williams wrote:
Very much my point, if Enron executives went to prison for knowingly propping up a bankrupt business with their client's money how can it is legal, or prudent, for a business to throw their client's money into a buying bonds from a state they know is already insolvent? Their shareholders should send round Mr Plod to have a word with them about what they think they are doing.


If the alternative to buying these bonds is mass panic and a collapse in market confidence the world over, that will hurt a bank's own business. So surely it is both prudent and legal for a board to decide to participate in a bailout.

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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 10:09 am 

Joined: Tue Aug 02, 2005 12:15 am
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Location: Brussels, Belgium
Mosquito wrote:
Plenty of coverage on Sky and BBC 24 now. It seems that when there are live pictures, that is something worth reporting. Just boring old words won't cut it. Even if the live coverage is people holding up banners most Brits can't read.


why is it worth reporting? Greeks on a demonstration/strike/riot ... for about the 100th time in the last two years ...

... ps - most, if not all, of these Greeks on the demonstrations/strikes/riots are public sector employees and/or members of one of the 15 or so different Communist Parties there.

Just so you know.

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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 10:19 am 

Joined: Wed Mar 14, 2007 11:26 am
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Quote:
EU Banks cannot participate (even) voluntarily.... this is a breach of trust and punishable by law

How would you prove that it was not in the interests of the bank - that the losses in an uncontrolled default would have been less than those incurred by accepting the long term roll-over ?

The likely outcome of this crisis is that the EU banking sector will come under increased state control. Maybe Josef Ackermann has more traditional views and is against this trend. Successful legal action in Switzerland, maybe (dunno enough about it). In the EU, given the political cover for the action, I'd say no way.

BTW – what would be the effect of a bank taking out 30 year Greek bonds ? Will they count towards the bank’s capital ratio ? I.e. it’s money that the bank has to tie up in this sort of way for regulatory purposes anyway. Except it becomes a phoney capital reserve, as no one is going to buy these bonds off the bank at full price ???

PS - I see you beat me to this, Nick. Great to see you posting.


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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 10:46 am 

Joined: Tue Apr 11, 2006 9:17 pm
Posts: 1384
Downhill PV wrote:
If the alternative to buying these bonds is mass panic and a collapse in market confidence the world over, that will hurt a bank's own business. So surely it is both prudent and legal for a board to decide to participate in a bailout.


Because the consequence of buying these bonds is to put off the problem and create a bigger mess. From the point of view of the board, they might also be open to legal action from shareholders. The logical course is to encourage others to buy the bonds whilst having nothing to do with them themselves and batten down their hatches for the storm. The 'others' in this case boil down to taxpayers. A good strategy for any bank would be to ensure it was the last man standing.

In any case, collapse in market confidence is a very real possibility because of huge structural faults which have been allowed to build up. There's no sign of these structural faults being remedied in an orderly way, and the structural faults in the Euro won't be dealt with as long as The Colleagues cling to the dream and see the Greek mess as a beneficial crisis.


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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 11:16 am 

Joined: Tue Aug 02, 2005 12:15 am
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Location: Brussels, Belgium
comet wrote:
...the structural faults in the Euro ... a beneficial crisis.


it doesn't take much logical contortion to see where we might be going with this.

One could argue that the Euro has structural faults precisely to create the beneficial crisis which will lead to more integration.

Also, let us not forget to whom Merkel is answerable (or beholden). As a CDU politician she is essentially the political front person for the German industrial elite ... who have been screaming for at least 2 years now that they want a lower exchange rate for the Euro. So is her handling of the Greek crisis incompetent or deliberate? It could be deliberate, as it is indeed leading to a lower exchange rate for the Euro, much to the dismay of the German banking elite who are driven by the idea of 0 inflation (and therefore high interest rates and a strong Euro). We still haven't had a reasonable explanation of why Weber was pulled out of the race to become ECB Chief by Merkel.

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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 12:07 pm 

Joined: Tue Apr 11, 2006 9:17 pm
Posts: 1384
Downhill PV wrote:

it doesn't take much logical contortion to see where we might be going with this.

One could argue that the Euro has structural faults precisely to create the beneficial crisis which will lead to more integration.


It's certain this was foreseen and the logic ran that Greece etc would run into trouble and could be rescued by the EU on its own terms. However other things weren't foreseen such as the rise of China and the general debt crisis which has become apparent since 2007 leaving the EU in no position to dictate in the way it intended and having to bend it's own rules - a very dangerous manouevre. Maybe having more than one nation in a mess at the same time was also unforeseen. So the crisis they intended is worse than they thought it would be and at a time when they are less able to deal with it than they imagined they could be. It's also clear that expectations have been raised in Greece which whatever happens, have to be reset and that was always going to be hazardous.

Downhill PV wrote:
Also, let us not forget to whom Merkel is answerable (or beholden). As a CDU politician she is essentially the political front person for the German industrial elite ... who have been screaming for at least 2 years now that they want a lower exchange rate for the Euro. So is her handling of the Greek crisis incompetent or deliberate? It could be deliberate, as it is indeed leading to a lower exchange rate for the Euro, much to the dismay of the German banking elite who are driven by the idea of 0 inflation (and therefore high interest rates and a strong Euro). We still haven't had a reasonable explanation of why Weber was pulled out of the race to become ECB Chief by Merkel.


I don't know about the domestic pressures on Merkel, but it's a mistake to believe that such people always know what they are doing or are acting for motives which are responsible or rational. They can end up like the pilot of a crashing airliner, frantically pulling levers and operating controls in the hope that something will happen, and because they can't think of anything else to do. As for Weber, many of these decisions are taken on the basis of the interplay between personalities, as in WWII leaders and their generals and the generals amongst themselves.


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 Post subject: Re: Back again
PostPosted: Tue Jun 28, 2011 12:27 pm 
Reuters wrote:
Governments across the single currency bloc are pushing the banks, pension funds and insurance firms that hold Greek sovereign debt to play a role in a second rescue package for the heavily indebted euro zone nation.

Coercing the banks is one thing, and that's bad enough, but I'd like to know exactly what this 'pushing' amounts to here in the case of the insurance companies and pension funds. Are the investment managers to the Little Man's Money Purchase Pension Scheme going to be 'encouraged' to offer a Best-Die-Now Balanced Annuity Fund with assets 'invested' in Greek junk? If so I wonder how the trustees will square their duty with that one. I wonder, too, how any such Greek 'assets' will count when it comes to assessing, say, insurance company solvency margins. Or will the solvency requirements be diluted with 'appropriate' [I hate that word] ad hoc dispensations? Clearly Prudence is being told to bugger off so the racketeers take over.

Unbelievable.


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