Comments on: Will Euro Bank Woes Take Down the EU? http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html Mon, 23 Nov 2009 00:58:00 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: François http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html#comment-19134 François Fri, 03 Oct 2008 02:28:00 +0000 http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-the-eu/#comment-19134 Excellent and informative feedback on that thread.<br/><br/>Thank you to everyone that participated into it. Excellent and informative feedback on that thread.

Thank you to everyone that participated into it.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html#comment-19131 Anonymous Fri, 03 Oct 2008 02:12:00 +0000 http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-the-eu/#comment-19131 Owe,<br/>7-8% of GDP is similar to the 700 bn$ bail out in the US + the AIG rescue.<br/>The US obviously can not only afford that, but a F&F bail out, a BS bail out and guarantees for the money market on top of that, despite, the both public and private debt levels in the US are higher than in Germany. <br/>Note: The debt levels given for EU countries as public debt include all state and municipal debt. Even when you don't count the social security trust fund as debt, you still end up with slightly higher public debt in the US, by taking the full count. Owe,
7-8% of GDP is similar to the 700 bn$ bail out in the US + the AIG rescue.
The US obviously can not only afford that, but a F&F bail out, a BS bail out and guarantees for the money market on top of that, despite, the both public and private debt levels in the US are higher than in Germany.
Note: The debt levels given for EU countries as public debt include all state and municipal debt. Even when you don't count the social security trust fund as debt, you still end up with slightly higher public debt in the US, by taking the full count.

]]> By: Owe Jessen http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html#comment-19106 Owe Jessen Thu, 02 Oct 2008 23:08:00 +0000 http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-the-eu/#comment-19106 Well, somebody said that Deutsche Bank could be saved by the German government - now, I'm not that deeply into the business, but let's assume that their counterparties in CDS would go bust, and it would have to get to levels of leverage from 50 to 10 - in other words it would have to be recapitalised to the tune of 150bn €. That would be about 50% of federal budget, or some 7-8% of gdp - I wonder if this would be managable. Well, somebody said that Deutsche Bank could be saved by the German government – now, I’m not that deeply into the business, but let’s assume that their counterparties in CDS would go bust, and it would have to get to levels of leverage from 50 to 10 – in other words it would have to be recapitalised to the tune of 150bn €. That would be about 50% of federal budget, or some 7-8% of gdp – I wonder if this would be managable.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html#comment-19093 Anonymous Thu, 02 Oct 2008 21:48:00 +0000 http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-the-eu/#comment-19093 French banks are not innocent, but somehow avoided loading up on the drivel some US dominated investment banks (I include UBS here) loaded up on. BancWest is about 9% of BNP activities and seems to be doing quite well for a bank from California. Credit Agricole and SocGen were just dabling in CDO's when compared to UBS (NY desks?) - they can lose a few billion and tell the tale... as SocGen proved at the beginning of this year, Citi and Merrill ... who had 40+ bn of super senior CDO positions from mezzanine (i.e. first risk, wiped out) subprime securitisations... and Merrill, Citi and UBS managed to add huge Alt-A and whole loan positions to that. SocGen and CredAgricole were a bit smarter than that. <br/>As for Deutsche Bank which is deemed too big to save... probably most of it is repo-based lending. And last but not least: the leverage ratio did not save WaMu or Wachovia... and was barely adequate for Citi... whose credit-card and direct subprime pain is still to come. French banks are not innocent, but somehow avoided loading up on the drivel some US dominated investment banks (I include UBS here) loaded up on. BancWest is about 9% of BNP activities and seems to be doing quite well for a bank from California. Credit Agricole and SocGen were just dabling in CDO’s when compared to UBS (NY desks?) – they can lose a few billion and tell the tale… as SocGen proved at the beginning of this year, Citi and Merrill … who had 40+ bn of super senior CDO positions from mezzanine (i.e. first risk, wiped out) subprime securitisations… and Merrill, Citi and UBS managed to add huge Alt-A and whole loan positions to that. SocGen and CredAgricole were a bit smarter than that.
As for Deutsche Bank which is deemed too big to save… probably most of it is repo-based lending. And last but not least: the leverage ratio did not save WaMu or Wachovia… and was barely adequate for Citi… whose credit-card and direct subprime pain is still to come.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html#comment-19069 Anonymous Thu, 02 Oct 2008 20:11:00 +0000 http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-the-eu/#comment-19069 That's pretty funny to read such views from a well known eurosceptic. Reality is, the UK is about to enter its worst recession in 40 years. Amazing household debt, debt culture, no savings, no industry, no agriculture, ailing nuclear facilities, ailing sewers facilities, ailing public transport, ailing healthcare... The national spécialité -finance- is near death (how incredible it is the ECB discount windows that pours lifeblood into UK financials veins...)<br/><br/>Well in a word the whole UK picture is bleak. And what we have is a paper about fragile EU banks from a brithis fellow ? Pathetic.<br/><br/>The crisis we are in will be felt from berlin to London sure, but the UK is likely to get back to its worst social ills, and maybe M. Gordon will have to beg for an admission in Eurozone, exactly like his 79s counterparts begged for entering the EEC... That’s pretty funny to read such views from a well known eurosceptic. Reality is, the UK is about to enter its worst recession in 40 years. Amazing household debt, debt culture, no savings, no industry, no agriculture, ailing nuclear facilities, ailing sewers facilities, ailing public transport, ailing healthcare… The national spécialité -finance- is near death (how incredible it is the ECB discount windows that pours lifeblood into UK financials veins…)

Well in a word the whole UK picture is bleak. And what we have is a paper about fragile EU banks from a brithis fellow ? Pathetic.

The crisis we are in will be felt from berlin to London sure, but the UK is likely to get back to its worst social ills, and maybe M. Gordon will have to beg for an admission in Eurozone, exactly like his 79s counterparts begged for entering the EEC…

]]> By: melpol http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html#comment-19067 melpol Thu, 02 Oct 2008 19:56:00 +0000 http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-the-eu/#comment-19067 The best way that we can get our economy quickly moving again is not by bailing out the big bad banks with 750 billion dollars but by giving that money to the homeless. It is estimated that there are three million homeless people in the United States that are costing the government billions each year to feed and shelter them. A grant of 250 thousand dollars to each person that can prove that they have been homeless for over a year would cost less money then the amount that the government is ready to waste on bailing out the banks. The results would produce the greatest spending spree in American history and jump start our economy. An added benefit would be that many of the homeless would purchase homes that have been foreclosed and bring added life to the housing market. Some Americans would be envious of the new found wealth of our most unfortunate citizens, but instead they should welcome their large contribution to our economy. The best way that we can get our economy quickly moving again is not by bailing out the big bad banks with 750 billion dollars but by giving that money to the homeless. It is estimated that there are three million homeless people in the United States that are costing the government billions each year to feed and shelter them. A grant of 250 thousand dollars to each person that can prove that they have been homeless for over a year would cost less money then the amount that the government is ready to waste on bailing out the banks. The results would produce the greatest spending spree in American history and jump start our economy. An added benefit would be that many of the homeless would purchase homes that have been foreclosed and bring added life to the housing market. Some Americans would be envious of the new found wealth of our most unfortunate citizens, but instead they should welcome their large contribution to our economy.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html#comment-19066 Anonymous Thu, 02 Oct 2008 19:40:00 +0000 http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-the-eu/#comment-19066 Who in the European Union actually produces anything? If you can name one then that one is carrying the load and is not to happy about it. (and I wouldn't rely on tourist income, it could dry up any second now) Who in the European Union actually produces anything? If you can name one then that one is carrying the load and is not to happy about it. (and I wouldn’t rely on tourist income, it could dry up any second now)

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html#comment-19065 Anonymous Thu, 02 Oct 2008 19:39:00 +0000 http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-the-eu/#comment-19065 URGENT: At 3:20PM today Thursday October 2, 2008.<br/><br/>The http://marketwarnings.blogspot.com has called for a bottom. Fireworks start tomorrow!<br/><br/>Deatils of the call are at:<br/><br/>http://marketwarnings.blogspot.com/2008/10/stock-market-trading-call-urgent.html URGENT: At 3:20PM today Thursday October 2, 2008.

The http://marketwarnings.blogspot.com has called for a bottom. Fireworks start tomorrow!

Deatils of the call are at:

http://marketwarnings.blogspot.com/2008/10/stock-market-trading-call-urgent.html

]]> By: François http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html#comment-19063 François Thu, 02 Oct 2008 19:35:00 +0000 http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-the-eu/#comment-19063 <b>A E-P is a nice fellow ... However when it comes to EC and specifically the Euro, Ambrose is litteraly grasping the problem with anything but fair judgment. His prejudices are deeply ingrained.</b><br/><br/>The latin attitude to household debt has evolved with time. Not in the right direction. But we are comparing apples and oranges here. <br/><br/>Yes both are fruits. So what? Getting into the details for credit activity in France itself.<br/><br/>PICTURE IN FRANCE IS NOT VERY DIFFERENT FROM THE ONE IN ITALY<br/><br/><i>"It is very difficult to imagine French banks to go down they way is happening in the Anglosaxon world. To apply for a loan is France is a tough task with very few possibilities to cheat. <br/><br/>Nothing like non-recourse stuff.<br/><br/>In France as well the stigma associated with bankrupcy is very high. It is even very difficult to apply for.<br/><br/>French families have limited personal loans and are among the highest savers in the world.<br/><br/>Bank will have their share of risk mostly linked to loans to overleveraged private equity transactions, and investments in US assets."</i><br/><br/>On a larger basis, Yes we are all nervous here. Certainly not because of French credit by French households but on the following:<br/><br/>- what has SocGen outside the country and specifically in the US (CDS exposure ?)?<br/>- same issue for AXA ?<br/>- what is the picture of BNP bancwest exposure to mortgages?<br/>- what are Calyon liabilities.<br/><br/>The rest is peanuts, so to speak. A E-P is a nice fellow … However when it comes to EC and specifically the Euro, Ambrose is litteraly grasping the problem with anything but fair judgment. His prejudices are deeply ingrained.

The latin attitude to household debt has evolved with time. Not in the right direction. But we are comparing apples and oranges here.

Yes both are fruits. So what? Getting into the details for credit activity in France itself.

PICTURE IN FRANCE IS NOT VERY DIFFERENT FROM THE ONE IN ITALY

“It is very difficult to imagine French banks to go down they way is happening in the Anglosaxon world. To apply for a loan is France is a tough task with very few possibilities to cheat.

Nothing like non-recourse stuff.

In France as well the stigma associated with bankrupcy is very high. It is even very difficult to apply for.

French families have limited personal loans and are among the highest savers in the world.

Bank will have their share of risk mostly linked to loans to overleveraged private equity transactions, and investments in US assets.”

On a larger basis, Yes we are all nervous here. Certainly not because of French credit by French households but on the following:

- what has SocGen outside the country and specifically in the US (CDS exposure ?)?
- same issue for AXA ?
- what is the picture of BNP bancwest exposure to mortgages?
- what are Calyon liabilities.

The rest is peanuts, so to speak.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-eu.html#comment-19058 Anonymous Thu, 02 Oct 2008 18:45:00 +0000 http://www.nakedcapitalism.com/2008/10/will-euro-bank-woes-take-down-the-eu/#comment-19058 Deutsche Bank is not too big to be rescued by the German gov't. Otherwise the Eurozone as a whole is as well, because there are other rescues (like Fortis, Daxia,...) and so even when no central action is persued, every gov't gets it share of problems.<br/><br/>I think it is very disingenious to cite USB as a European bank, when you talk about the Eurozone. The UBS is at least as much a US bank as a Eurozone bank. I live in Germany in the state next to Switzerland. I have never seen a UBS branch office here. <br/><br/>Of course he misstates Steinbrueck, but who cares. But this of course can only understand, who understands, that leverage is not at all at the heart of the problem, but intransparency. Deutsche Bank is not too big to be rescued by the German gov’t. Otherwise the Eurozone as a whole is as well, because there are other rescues (like Fortis, Daxia,…) and so even when no central action is persued, every gov’t gets it share of problems.

I think it is very disingenious to cite USB as a European bank, when you talk about the Eurozone. The UBS is at least as much a US bank as a Eurozone bank. I live in Germany in the state next to Switzerland. I have never seen a UBS branch office here.

Of course he misstates Steinbrueck, but who cares. But this of course can only understand, who understands, that leverage is not at all at the heart of the problem, but intransparency.

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