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The Italy (EWI -3.7%) and Spain (EWP -3.1%) ETFs lead a now-tumbling Europe (FEZ -1.8%) as -...

The Italy (EWI -3.7%) and Spain (EWP -3.1%) ETFs lead a now-tumbling Europe (FEZ -1.8%) as - maybe we're being too simplistic here - Eurogroup President Dijsselbloem has more or less told anybody with greater than €100K in deposits at what could be a troubled bank they need to think about getting their money out. Italy's Unicredit and Intesa Sanpaolo are halted down more than 5%. EUFN -2.4%.
Comments (33)
  • I am not sure traders are aware that Italian bank stocks were halted due to bank runs - at least that is the report.

     

    We continue to discount the impact of EZ bank runs but that is just plain stupid. This has really, really big implications. Don't assume that all is well just because the markets are slow to react. They are not OK.
    25 Mar 2013, 11:12 AM Reply Like
  • Precisely, there is also a big euro dump back home into the ruble going on, signalling the Russians are bank running.
    25 Mar 2013, 12:07 PM Reply Like
  • Was expected, but wow. This morning futures business is such a cluster f*ck. If they need to ban anything, it is the no-volume overnight futures screwing with people's heads.
    25 Mar 2013, 12:15 PM Reply Like
  • @Stephen: These 4-8am EST moves (dislocations) in the futures markets have been going on for quite some time, quite pronounced occasionally in the PM markets. In fact, they've become somewhat predictable, and like watching sensational wrecks at a racecourse. They are akin to mini-market-corners. As for calling them overnight, that is a relative term since it is morning in London, noon in Frankfurt and early evening in Singapore/HK.
    25 Mar 2013, 12:29 PM Reply Like
  • What time is it on Mars?
    25 Mar 2013, 12:33 PM Reply Like
  • And as of 2 PM EST on 3/25/12 there is a 'miraculous' rally that looks like fake Plunge Protection Team manipulation to me, but if you're not conspiracy minded just call it 'program trading'.
    25 Mar 2013, 02:06 PM Reply Like
  • The morale of the story - the European politicians are a bunch of nincompoops - they cannot solve the crisis for the longest time, and now they come up with such a dumb idea that is bound to cause bank runs.
    25 Mar 2013, 11:41 AM Reply Like
  • vtorch, they are sending a clear signal, after subtle signals have failed to effect the desired changes in behavior.

     

    In the EU, there are financial consequences. The music always stops, so be aware of your exposures on the downside.

     

    Change is hard but necessary. This is far from done.
    25 Mar 2013, 12:43 PM Reply Like
  • I'm not sure why people think this is a watershed moment. How is this any different than what it should be? First equity investors get wiped out, then junior debt, then senior debt, then uninsured depositors. How is this news? Everybody complaining here, what are they saying? That the taxpayer should be on the hook? Then you might as well nationalize all banks.
    25 Mar 2013, 12:50 PM Reply Like
  • Because the Eurocrats just kicked the stool out from underneath the Draghi Put.
    25 Mar 2013, 02:00 PM Reply Like
  • What makes you think they are dumb? Perhaps they all have masters they answer to. "Some people just want to see the word burn". Alfred must be the wisest butler that has ever lived.
    25 Mar 2013, 11:43 AM Reply Like
  • Man, I'm sick of these Europeans....
    25 Mar 2013, 11:46 AM Reply Like
  • I might add that deposit insurance creates a false sense of security. Though in this case it was honored, it does not prevent the possibility of bank runs, and the insurance is only as good as the entity insuring the deposits. There is no substitute for a bank/banking system showing definitively that it is well capitalized, and doesn't make risky gambles with depositors' money. Moral hazard rearing its ugly head.
    25 Mar 2013, 12:01 PM Reply Like
  • If you think that the botched bank robbery in Cyprus isn't going to be repeated all over Southern Europe, I've got at least half a dozen bridges to sell you at prices starting below scrap.
    25 Mar 2013, 12:02 PM Reply Like
  • Only an idiot would have any amount over €100,000 left in any eurozone bank by the end of today. Why take the risk? For a paltry 1% interest??
    25 Mar 2013, 12:45 PM Reply Like
  • Really? Did you check all European banks how much equity and junior and senior debt is in the way that needs to be wiped out first before they'd touch uninsured deposits? He didn't say they'll go after deposits first, did he?

     

    You are aware that in Cyprus all that "protection" didn't amount to anything, right? Because of their completely oversized depositor base? And that this isn't the case everywhere?
    25 Mar 2013, 12:53 PM Reply Like
  • Do any of those bridges reach over to the U.S. ?
    25 Mar 2013, 12:53 PM Reply Like
  • "Sleep well", "Don't Worry", "Politicians know what's best for you"

     

    LOL!!!
    25 Mar 2013, 12:54 PM Reply Like
  • He clearly should have waited with these comments until the european debt crisis is in the rearview mirror. However, in the long I think these are definitely helpful steps that may prevent huge buildups of deposits and subsequent crappy loans in aggressive banks.

     

    I'm a proponent of skin in the game. There is a threshold for insured deposits for a reason. Not sure why people think that despite the threshold all deposits should always be bailed out, no matter the circumstances.

     

    Otherwise I guess all you have to do is always move all your money to the most aggressive bank, regardless of its financial health. Heads you win, tails you get bailed out. Is that how it should be?
    25 Mar 2013, 12:06 PM Reply Like
  • "Heads you win, tails you get bailed out. Is that how it should be?"

     

    Those who got bailed out during the 2008 financial crisis by the Fed did indeed reap that moral hazard game.
    25 Mar 2013, 12:11 PM Reply Like
  • Yes, isn't it funny how people *always* complain? They whine when the taxpayer jumps in ("oh the moral hazard"). They whine when the bondholders jump in ('oh the systemic risk"). They whine when the depositors jump in ("oh the systemic risk" again, plus "how unfair"). They don't even look at the individual circumstances, all they do is whine.

     

    Do people realize by now that there are NO good options? They all suck. Somebody will always be hurt, and it's never the people that caused the mess.

     

    Everybody who says Europeans are idiots probably said this about every other approach that was taken, be it over there or here. They probably said the same about TARP, and about the Fed's QE programs. I'm so glad that none of them are in charge; they'd still be looking for that perfect solution.
    25 Mar 2013, 12:14 PM Reply Like
  • So what is your solution?
    25 Mar 2013, 12:32 PM Reply Like
  • I don't have a good one either. The best solution is to not let banks get too big in the first place, but that doesn't help now, after the fact. The clean up now is messy and will be messy.

     

    The larger the bank the higher its capital requirements should be. If you want to run a bank with assets that exceed your country's GDP then maybe your capital requirements should be 20-25 % of your total loan base in equity alone. That should be cost prohibitive enough to keep this from happening.

     

    Plus we need clawback provisions for management boni. As long as management pretty much always either wins or doesn't get scratched when the house of cards collapses we'll have more stupid loans and crises.
    25 Mar 2013, 12:36 PM Reply Like
  • He should say instead "don't worry and don't move your money"?

     

    I'm remembering WaMu here a few years ago.

     

    I don't know how bad it is with those banks, but taking a "please mismanage my funds" stance asking for heartache.
    25 Mar 2013, 02:11 PM Reply Like
  • When you consider that most SMEs have six or seven figure bank balances, just to stay in business, this is much bigger than killing Cyprus and bypassing their parliament. I think Europe is finished.
    25 Mar 2013, 12:10 PM Reply Like
  • "Europe is a miracle."
    - Hillary Clinton
    25 Mar 2013, 12:37 PM Reply Like
  • One big mofo of a hair cut is on line.
    25 Mar 2013, 12:47 PM Reply Like
  • FRBNY pumping liquidity like crazy, stepping on the VIX.
    25 Mar 2013, 12:49 PM Reply Like
  • You know dude was short the market when he made the comment....
    25 Mar 2013, 12:56 PM Reply Like
  • It's "Template time" i just got the mail !
    25 Mar 2013, 12:58 PM Reply Like
  • From now on, I will call this the "European Template"!
    25 Mar 2013, 02:12 PM Reply Like
  • I am sure they like you too.
    25 Mar 2013, 01:44 PM Reply Like
  • if you look at the Reinhardt-Rogoff "prototype" for a financial crisis (http://bit.ly/LgZ4Q7), europe is at the stage where the failing banks are supported by the central bank, and capital controls are being imposed.

     

    according to the R-R prototype, the next stage would usually be a big euro devaluation, followed by serious inflation.

     

    so far, the "bank runs" in europe are depositors moving their money from PIIGs banks to german banks. my view is the eurozone will finally blow up when people start moving their money out of german banks to protect themselves from inflation.
    25 Mar 2013, 03:27 PM Reply Like
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