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The big news isn't the €100B, tweets Pawel Morski, it's that the eurozone (Germany) for the...
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Saturday, June 9, 2012, 5:30 PM ETThe big news isn't the €100B, tweets Pawel Morski, it's that the eurozone (Germany) for the first time passed on imposing more austerity as a condition of the bailout.
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"MUTE'EM"
2. Fire the directors and officers and cancel all severance packages, shares, and options (all of which should be rendered worthless anyway, but just in case).
3. Install a new board of directors tasked with selling off or shutting down all non-banking operations (e.g., prop trading, hedging, market-making, mutual and hedge funds, analysis) and selling any nonperforming assets from which the board believes the bank cannot economically obtain recovery.
4. Issue the bailing-out entity 8% perpetual cumulative preferred shares with par value equal to the bailout funds. These shares should come with the right to prohibit or limit issuance of debt and should not be callable under any circumstances.
5. Convert subordinated debt into restricted common equity until the bank is sufficiently capitalised that it would have 10% common equity under a scenario in which an extremely severe depression were to begin immediately and last 20 years. This equity cannot vote, receive dividends, or be traded until the process in (3) is completed to the satisfaction of the board and the total losses known.
If I were Germany, I would consider these the absolute minimum conditions for bailing out a foreign bank. Tough but fair, and allows the bank to continue functioning as a proper financial intermediary.
This basically says it all.
especially if a Spanish Banking collapse hurts Germany immeasurably
Where is the collapse? Where? LMAO at zerohedge and all gold buggies.
The real proof will come when we see that the stuff being propped up with our work, our time, our savings, and our future is stuff we don't need and were not benefiting from. The doomsayers and the bailout faction are one and the same; the doomsaying is merely the excuse they use to persuade the ignorant to comply with their ever-growing demands for more of our money. Those who know better say "let the whole thing implode" precisely because we know it won't harm us.
You seem to be asserting that "everything will be fine" because workers and savers can somehow be persuaded or forced to provide more bailouts indefinitely, and by doing so continually avert the disaster your purported doomsayers predict. In fact, the exact opposite is true: the crisis will continue as long as workers and savers continue to subsidise the moochers; *that* is the disaster that must be averted, not the meaningless cascade of sovereign defaults and bank failures the endless bailouts seek to forestall. Only once we rise up and put a stop to it, the crisis -- not civilisation as we know it, as the doomsayers would have us believe -- will finally come to an end.
That's what we have been hearing now each year....nothing has happened. Why? Because there is a world out there, the air is refreshing.....I pity the doomers who live an anti-social life at the altar of dreams of the world reverting back to the stone age....
Stone ages don't have Halo IV!
Looks like Germany just threw in the towel on imposing austerity. That is FANTASTIC for Gold.
The EU mess is just the front show, I'd be more worried about the global slowdown and recessions that are picking up steam.
I for one will be out of all my longs by triple witching Friday and short going into a traditionally poor performance period of June/July.
Those assets are not declining in value; they're declining in price (well, in general... a few houses may have fallen into the sea or become infested with mold, but insurance policies will cover those events). They're exactly as valuable as they've always been, but people are reevaluating their estimates of those values. That's a natural and normal thing for markets to do. The problem isn't what's happening in the present (price declines), it's what's happened in the past (paying too much for assets, and particularly using leverage to do so). The reason that none of the measures taken to address the problem are working is that measures we take now affect only the present and the future. They cannot alter the past, so they are inherently ineffective. Much as people hate it, the right answer is to do nothing and let the chips fall where they may. To the extent effort is expended, it should be expended on preventing prices from becoming so unreasonable in the future -- the time we *can* affect.
Then again... another summer decline to 1207-1220 seems most likely, with WORST case 1074 re-test of Oct 2011 lows
Gold 1445-1455 then later 2200-2300 in 2013
Finally they acknowledge that we are in a world war of currency devaluation. It is an unprecedented race to the bottom and Japan, the U.S. and Switzerland are winning.
There is nothing to stop the deflation avalanche now and the two big winners are going to be precious metals and bonds.
Yes...the world is upside down.
Doomers are right, this is clearly getting worse.
You bring up an interesting point that I think is being overlooked by the whole bull community. Why should any country accept austerity when Spain just proved that if you threaten and stall you can get a better deal without strings attached? Greeks already do not want any of the deal that is on the table. What do they really have to lose by holding back? Pushing austerity will only bring them further into the trash. If Spain can get money without conditions than why not them? This IMO will cause the recently bailed out nations to become more daring and likely try to go back to the bargaining table.
On another note even with the money Spanish banks will be provided how do you supposed the country will suddenly turn around? How will any of these countries turn around? The current policies in place are not growth promoters hence why economic conditions continue deteriorating. This bailout provided more questions than answers and little relief of any positive direction.
If I were Germany and could borrow for 1% for as long as I want, I would offer 400B euros for STD and all its debt... take it or leave it, no second chances. And likewise for the rest of them.
The market will rally every time there is some hint of some partial solution to Europe...yet, the growth story is bound to limit those rallies, and will probably even undo them.
Look at yesterday data dump.....
Doomers lose again....
TUNAMAN is absolutely RIGHT. No other countries will ever accept austerity AGAIN from today onwards. You just need to threaten your way out. The can is kicks a few miles down the road Yet again.