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The big news isn't the €100B, tweets Pawel Morski, it's that the eurozone (Germany) for the...

The 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.
Comments (36)
  • Andres Rueda
    , contributor
    Comments (175) | Send Message
     
    Yipee!!! Print, print, print...
    9 Jun 2012, 05:32 PM Reply Like
  • Day Trader001
    , contributor
    Comments (767) | Send Message
     
    CNBC will run it into the ground asap! The Doom & Gloom network hosted by Jack & Jill Negative!!

     

    "MUTE'EM"
    9 Jun 2012, 09:08 PM Reply Like
  • Dan Naumov
    , contributor
    Comments (355) | Send Message
     
    How exactly do you impose austerity on BANKS, which is who's being bailed out?
    9 Jun 2012, 05:45 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    1. Cancel all existing common and preferred stock.

     

    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.
    9 Jun 2012, 06:11 PM Reply Like
  • Dan Naumov
    , contributor
    Comments (355) | Send Message
     
    What does any of the above have to do with austerity?
    9 Jun 2012, 07:50 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Your question implied that you didn't understand the analogue to reductions in government spending when banks, not sovereigns, were being bailed out. The purpose of sovereign spending caps being the protection of the creditors' interests, I provided an analogous set of conditions with respect to banks to achieve the same end. If you were asking something else, you have my apologies.
    9 Jun 2012, 08:08 PM Reply Like
  • thotdoc
    , contributor
    Comments (1839) | Send Message
     
    YES and do it over and over to the 'best and brightest'.
    9 Jun 2012, 11:21 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (17900) | Send Message
     
    http://seekingalpha.co...

     

    This basically says it all.
    9 Jun 2012, 05:52 PM Reply Like
  • bbro
    , contributor
    Comments (10321) | Send Message
     
    It does Germany no good to have their 2 year bonds yielding 0%.....Or for that matter 7 year paper at .86%
    especially if a Spanish Banking collapse hurts Germany immeasurably
    9 Jun 2012, 06:16 PM Reply Like
  • Andres Rueda
    , contributor
    Comments (175) | Send Message
     
    It does the folks who buy those bonds at those tiny yields even worse. Interest rates revert to historical norms, and a big chunk of the mark-to-market value of these bonds will vanish.
    9 Jun 2012, 09:18 PM Reply Like
  • detto
    , contributor
    Comments (76) | Send Message
     
    HahahaHahaha!!!!!!! Another slap in the face of doomers.

     

    Where is the collapse? Where? LMAO at zerohedge and all gold buggies.
    9 Jun 2012, 06:23 PM Reply Like
  • Andres Rueda
    , contributor
    Comments (175) | Send Message
     
    I guess the we are all bankrupt / everything is terrible / end of the world will have to wait another day...
    9 Jun 2012, 06:33 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    that's all that has happened. It's been pushed out to another day. Every bailout, another day. By the way, how do you like what this will do to devalue savings?
    9 Jun 2012, 06:42 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    The real slap in the face to the doomsayers will come when this colossal farce is finally allowed to reach its inevitable self-destructive conclusion, and the only people who are harmed by it are bankers, politicians, and leeches. Bailouts serve only to postpone inevitable failure and increase the eventual losses of those who provide them.

     

    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.
    9 Jun 2012, 08:18 PM Reply Like
  • detto
    , contributor
    Comments (76) | Send Message
     
    Hmmm....every year at around this time (summer), comes people telling the world is going to end, that stocks are evil, that gold is going to reach $20,000, that famine is gonna hit us, that oil would be depleted, that earthquakes are going to destroy us, that nuclear radiation from Japan in any moment would kill us all, that if Greece CDS were activated, trillions of dollar in losses would send all global banks to the abysss....

     

    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....
    9 Jun 2012, 08:29 PM Reply Like
  • detto
    , contributor
    Comments (76) | Send Message
     
    My apologies for my "engrish". :) It is my second language.
    9 Jun 2012, 08:36 PM Reply Like
  • birdmaestro
    , contributor
    Comments (128) | Send Message
     
    You did just fine. Cheers!
    9 Jun 2012, 09:03 PM Reply Like
  • realornot
    , contributor
    Comments (1281) | Send Message
     
    really, this year is different. December is the end of the world so enjoy this bounce. Doomers are gamers! They are networked super high speed life in nano seconds!

     

    Stone ages don't have Halo IV!
    9 Jun 2012, 10:15 PM Reply Like
  • realornot
    , contributor
    Comments (1281) | Send Message
     
    btw, 1st language is baby talk! Universal one !
    9 Jun 2012, 10:16 PM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    "LMAO at gold buggies"

     

    Looks like Germany just threw in the towel on imposing austerity. That is FANTASTIC for Gold.
    10 Jun 2012, 09:13 AM Reply Like
  • nightfly
    , contributor
    Comments (1017) | Send Message
     
    buy the rumor, sell the news - always works that way..especially given the frequent nature of the now, quarterly EU bailouts.

     

    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.
    9 Jun 2012, 06:34 PM Reply Like
  • Playdeep
    , contributor
    Comments (58) | Send Message
     
    The banks are not the problem but a symptom. Some banks maybe poorly managed, but the problem is the bank’s assets are rapidly falling in value; housing prices (mortgages) and government issued bonds are declining in value. On top of that their maybe a liquidity squeeze and depositors pull their money out of the banking system. This will have a ripple effect through the banking system. The question is at what point does this sink the Eurozone? You can’t save every county in the Eurozone, there has to be a tipping point (Ireland, Greece, Spain, Portugal, Italy). This could be a very long and ugly fight within the Eurozone.
    9 Jun 2012, 06:58 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    "...the problem is the bank’s assets are rapidly falling in value; housing prices (mortgages) and government issued bonds are declining in value...

     

    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.
    9 Jun 2012, 08:27 PM Reply Like
  • Playdeep
    , contributor
    Comments (58) | Send Message
     
    Mortgage value don't decline unless the underlying asset value (home prices) are falling. You can't have housing values increasing and mortgages falling, they are interconnected. I generally agree with you that the free market will find the correct level for asset values. The problem is this was a goverment created problem. The end result will be quick and painful with no goverment intervention or slow and some what less painful outcome. Both are not good.
    9 Jun 2012, 09:16 PM Reply Like
  • Stock Reversals
    , contributor
    Comments (297) | Send Message
     
    5 waves from 1422-1267 is bearish. The counte-trend rally we forecast would begin at 1269 or 1254. The rally should 3 waves to 1344-1361, outside shot at 1390 range...

     

    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
    9 Jun 2012, 08:47 PM Reply Like
  • realornot
    , contributor
    Comments (1281) | Send Message
     
    Gold is mounting a deep dive!
    9 Jun 2012, 10:17 PM Reply Like
  • markjones12
    , contributor
    Comments (24) | Send Message
     
    Do the lenders get any collateral for their 100 billion loan(such as bad real estate loans, or bad sov. debt) or is it just a gift to be repaid in the future? Does anyone know how this will be structured?
    9 Jun 2012, 09:06 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (9635) | Send Message
     
    Germany HAD to capitulate. The whole planet was against them.

     

    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.
    9 Jun 2012, 09:22 PM Reply Like
  • tunaman4u2
    , contributor
    Comments (3218) | Send Message
     
    Funny how bulls are saying this is a slap in the face to doomers, this is actually EXACTLY what they've been talking about, its reached a point where they can't even impose ANY austerity demands or its failure... now greece & the rest will NEVER accept austerity. The amount of money that will be required now will be immense.

     

    Doomers are right, this is clearly getting worse.
    9 Jun 2012, 09:25 PM Reply Like
  • the_value_vulture
    , contributor
    Comments (224) | Send Message
     
    " ... now greece & the rest will NEVER accept austerity."

     

    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.
    9 Jun 2012, 10:19 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Vulture, that's the very definition of a bailout. If Germany were acting in the interest of the German people, they would not be offering a bailout; they would be offering a buyout. At rock bottom, take it or leave it prices. The way to resolve a failed bank is to sell off its assets to a more prudent buyer, who you can be assured will not be offering par. We don't have that here, and this is not a resolution of anything. It is a continuation of the policy of failure.

     

    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.
    9 Jun 2012, 10:36 PM Reply Like
  • Chris Lau
    , contributor
    Comments (2367) | Send Message
     
    Europe is just a sideshow now. World growth is the story, and it's not looking like a very pretty one. Keep your eyes on china.

     

    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.
    9 Jun 2012, 11:23 PM Reply Like
  • detto
    , contributor
    Comments (76) | Send Message
     
    China exports accelerated, there was growth of both exports and imports at the fastest pace in this year.....

     

    Look at yesterday data dump.....

     

    Doomers lose again....
    10 Jun 2012, 06:45 AM Reply Like
  • sethmcs
    , contributor
    Comments (3427) | Send Message
     
    Let's wait for the details. We do not know how this is going to work who wins and who loses. Ideally, the bailout should protect the depositors first and foremost. If not the run on the banks will destroy the banking system.
    9 Jun 2012, 11:29 PM Reply Like
  • ykp3888
    , contributor
    Comments (22) | Send Message
     
    Doom and gloom will be gone for now. Bright and Sunny are here. The world moral cannot even be found in the abyss. The world will not end now but maybe in the next decade. The current generation has learn the trick of all trades. Borrow and threaten and don't need to pay back. No need to be responsible and no obligation. Great lesson learn.
    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.
    9 Jun 2012, 11:40 PM Reply Like
  • ykp3888
    , contributor
    Comments (22) | Send Message
     
    Fund go to Spanish bank and the bank use it to buy Spain government bond because it is "safer" than loaning to retail. The rat chasing its tail...LoL
    10 Jun 2012, 12:20 AM Reply Like
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