Monday, June 15, 2009

ECB "Instability" Report.......

Not much stability to be found in the ECB Financial Stability Review ( Warning : Over 200 Pages ) ......

Ich konnte wenig Stabilität im 226 Seiten langen EZB Stabilitätsüberblick finden.....


Banks in the 16-nation eurozone face $283bn of further losses this year and next as the recession forces them to write off bad loans, the European Central Bank warned yesterday
> Wishful thinking.....

> Denke das die EZB wie im Regelfall der Musik mal wieder gnadenlos hinterger läuft.... Die Summe würde jeder wohl nur allzu gern für bare Münze nehmen.... Na ja , die EZB erwartet ja auch bereits für 2010 wieder Wachstum.....

The warning, which helped push down the euro against the dollar, came just hours before Moody's, the credit rating agency, downgraded 30 Spanish banks and cajas (unlisted regional savings institutions / see Moody’s bank downgrades, pain in Spain edition & Spanish Banks CDS Ouch!!! via Alea), citing the worsening quality of their loans ( see Chart Of The Day - " 90 Day Delinquency Rates In Spanish RMBS" ) and the struggling Spanish economy.

FT Alphaville

MADRID, June 16 (Reuters) - The number of houses sold in Spain fell by 47.6 percent in April compared to a year earlier, marking the largest percentage fall in 16-straight months of decline, the National Statistics Institute said on Tuesday.
The fates of the eurozone economy and its banks have become increasingly interlinked, the ECB said yesterday in its latest financial stability review report, with bank losses increasingly being caused by bad loans, rather than losses on securities.

Risks to the stability of the financial sector remained high, it said, while "uncertainty prevails" over the banking system's ability to absorb further shocks.

> The exposure to Eastern Europe isn´t "helpful"

> Die extrem starke Stellung in Osteuropa wird die nächsten Jahre ebenfalls wenig hilfreich sein.

Banks' exposure to eastern Europe The Economist

Lucas Papademos, ECB vice-president, said that "a negative interplay" between the financial sector and the economy had become clearer since the start of this year. He stopped short of calling for more transparent stress testing. The ECB, which acts as the monetary authority for the countries that share the euro, is not a bank supervisor.

In spite of the scale of the bank losses forecast by the ECB, its prediction was less gloomy than the International Monetary Fund, which in April put expected writedowns this year and next at $750bn, although taking account of loss provisions and write-offs up until May this year would reduce that to about $540bn.
> I´ll go with the IMF...... Especially in the face of news like this Record Job Losses in Europe via Financial Ninja.... I think it is a safe bet that record job losses will be popping up a a regular basis for years to come....

> Ich bin da eher der Meinung des IMF...... Besonders da wir diese Meldung ( Record Job Losses in Europe via Financial Ninjy ) die nächsten Jahre wohl noch öfter zu hören bekommen werden......

The gap between the ECB and IMF forecasts is due to different assumptions, for instance on the performance of loans.

The ECB also expressed confidence that the eurozone's largest banks could endure any further economic deterioration, saying "most . . appear to be sufficiently well capitalised to withstand severe but plausible downside scenarios".
> Needless to say that i beg to differ...... Taxpayer to the rescue....... This is especially true for the German Landesbanken ( seeGermany's Subprime Crisis: Interview With Achim Dubel & A darkened outlook for Germany’s banks ) The "funny" part is that they were once created to support local economies and are owned by regional governments and savings banks aka the taxpayer.......

> Brauche wohl nicht zu erwähnen das ich diese Meinung nicht teile..... Denke das der Steuerzahler schon bald wieder im großen Stil erneut die Zeche zu zahlen hat ( Bad Banks..... ) Da machen solche Geschichten ( Abstruse Investments der Landesbanken ) gleich doppelt so viel Spaß ....... Passender als Extra 3 ( siehe "Werbespot" der HSH Nordbank ) kann man das Debakel aus deutscher Sicht kaum zusammenfassen ( AusnahmeGermany's Subprime Crisis: Interview With Achim Dubel ) ..... :-)

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Blogger Knute Rife said...

A mere 283 bn USD over the next 18 months. This should not be driving the euro down against the dollar, given the massive loss exposure still hanging over the banks here.

7:20 PM  
Blogger Knute Rife said...

Oh, and as an added bit of snark, I'd like to see an honest IMF assessment of US bank exposure. But given the incestuous relationship of IMF and Goldman Sachs/JP Morgan....

7:27 PM  
Blogger jmf said...

Moin Knute Rife,

i agree.

The ECB is as always way behind the curve.

I think that even the IMF number could be low.

A longlasting very deep recession is written in stone.

Parts of Europe will face something close to a depression.

It will be really interesting to see how the € will react over the longer term against the $ ( both terrible ) and if the EZB will be going QE full speed.

So far the € 60 billion in covered bonds are nothing to really talk about.....

9:49 PM  
Anonymous James said...

Minister for Business Affairs Gylfi Magnússon deemed it likely that Icelandic authorities would launch talks with the European Central Bank next fall on support in currency issues. The talks would not have to be directly related to the EU membership application talks, but could take place alongside them, the minister said.

5:44 AM  

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