Europe.. might be Weeks away from Expanded debt crisis

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PostThu May 06, 2010 11:36 pm » by Reinaul

Europe May Be Months, Conceivably Weeks Away from an Expanded Debt Crisis …..

Reuters is a Rothschild owned mouthpiece I believe. This article highlights a coming financial tsunami! Via this engineered crisis and orchestrated attacks, the ECB is increasingly seen as the solution. They will soon have the full approval/mandate to print Euros out of thin air to bailout the Eurozone. National economic sovereignty will thus be surrendered and with it politicians will have to take orders from the ECB banksters.

Many possible triggers for wider euro debt crisis
Europe may be months, conceivably weeks away from an expanded debt crisis that cuts more countries off from access to the markets and forces fresh emergency action by rich governments or the European Central Bank.

The many potential triggers for an expanded crisis include a failed bond auction, any signs that Athens or donor nations were backing away from a 110 billion euro ($141 billion) bailout of Greece, and a freezing up of Europe’s interbank money market. For now, Portugal, Ireland and Spain, widely seen as the next possible “dominos” after Greece, remain in significantly better shape. The interbank market is far from grinding to a halt as it did after Lehman Brothers collapsed in late 2008.

But the spread of investor jitters in the past 24 hours, affecting markets as distant as yen swaps in Tokyo, suggests market conditions could deteriorate as rapidly as they did during the global financial crisis of 2007-2009. “In my view there is a 10-20 percent chance that at least one more country will need rescuing as it finds itself shut out of the markets,” said Marco Annunziata, chief economist at Italy’s UniCredit bank. “If it happens, it is most likely to happen in the coming six months.”

Lena Komileva, head of G7 market economics at money broker Tullett Prebon, said the crisis over Greece’s solvency had morphed into a capital markets crisis, and the markets had begun to feed on their own momentum. “Another credit event similar to Greece can happen within weeks,” she said.

German Chancellor Angela Merkel and top economic policy makers in the euro zone appeared to recognize this in their warnings about the risk of an expanded crisis on Wednesday. “It’s absolutely essential to contain the bushfire in Greece so that it will not become a forest fire and a threat to financial stability for the European Union and its economy as a whole,” said European Monetary Affairs Commissioner Olli Rehn.

The markets could also panic if commercial banks around Europe, which have cut off funding lines to Greek banks, decide to do the same to banks in Portugal, Ireland and Spain. So far the stresses in the money markets do not approach those seen at the peak of the global crisis. The two-year euro zone swap spread, which measures the aversion of lenders to deal with any but the most creditworthy borrowers, has widened to 65 basis points, its widest since mid-March 2009, but is far below the record 130 bps hit in October 2008.

However, large Spanish and Portuguese banks are having to pay a higher price to access the interbank market, and this premium could widen if sovereign debt markets sink further.

The political difficulty of assembling an international bailout for a country — the Greek bailout was preceded by months of wrangling between angry governments — suggest the ECB would be the first institution to respond to an expanded crisis.

It could reintroduce emergency measures taken during the global crisis, resuming a programme of lending in dollars and Swiss francs over six- and 12-month maturities, or extending its promise to lend banks all the weekly funds they need at fixed rates beyond mid-October. It might also abandon minimum credit rating requirements for more countries’ sovereign bonds when they are used as collateral in its money market operations, as it did for Greece this week.

Its most radical step would be to buy countries’ bonds from the secondary market, shouldering their debt — though that would be hugely controversial and hurt the ECB’s reputation for conservative monetary policy. Analysts think it might pledge some 200 billion euros in such purchases. “They’ve a huge amount of armoury at their disposal. They can do a huge amount of things and I think they will be able to stabilize the market at some point,” said UBS chief European economist Stephane Deo. ... bt-crisis/
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PostFri May 07, 2010 2:20 am » by nm156

Save all the paper moneey you can get your hand on. Better yet buy all the failed currency you can it makes for great source of ignition for bar-b-ques.
Anything of interest always comes at ones expense.

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PostSun May 09, 2010 10:25 pm » by Reinaul

ECB Announces Meltdown, EU Leaders Scramble In Emergency Meetings

May 9, 2010 (LPAC)—Eurozone government leaders frantically met over the weekend in an effort to prepare something to prevent a meltdown on Monday.

However, nothing short of a government action based on a Glass-Steagall standard, in order to protect commercial banks and dump casino-like operations, will work. Even a Fed-like bailout of the Eurozone is impossible, as there is no lender of last resort, and the European Central Bank (ECB) must violate its statute in order to do that. Unfortunately, from current indications, it seems that the EU ship of fools is moving towards a supranational hyperinflationary dictatorship.

On Friday, Europe's banks made an appeal for the ECB to buy the bonds of Eurozone members. Banks from 47 European groups urged the ECB to become a buyer of last resort of Eurozone government bonds. There was speculation that the central bank could be preparing a $762 billion loan facility for one-year loans at 1 percent to help more than 1,000 banks in their funding.

On Friday evening, May 7, while Eurozone leaders were gathered at an emergency meeting in Brussels, and the G7 Finance Ministers were having a parallel conference call joined by both Timothey Geithner and Ben Bernanke, ECB head Jean-Claude Trichet stated publicly that "this is a systemic crisis." The ECB had monitored the interbanking system, which gave signs of freezing.

Barack Obama joined the Eurozone heads of state and government in a conference call. According to Italy's La Repubblica, the Portuguese Prime Minister said that on Monday, May 10, his country will not able to face a speculative attack. Other reports say Spain also presented a dramatic picture. Germany's Angela Merkel stated today that "the situation is serious," and that "if you watch the spread of several countries, you see that we are facing a negative development in more countries."

There was much pressure on the ECB to intervene with the "nuclear option," i.e. directly buying government bonds. It is not clear what the ECB will come up with (one option circulated in the past days is that the ECB borrow dollars from the Federal Reserve). Another option discussed is to give the EU Commission the power to borrow directly on the markets, into a safety net fund to "protect" the euro against speculation. Other options include reinstating 12-month loans for banks at fixed interest rates mentioned above or announcing a blanket waiver of the ECB's collateral rules for all Eurozone sovereign debt in money market operations.

At the end, "concrete actions" were announced, which will be worked out in detail by the EU Commission on Sunday and handed over to the Ecofin (EU Finance Ministers) meeting Sunday evening, for implementation on Monday.

French President Nicolas Sarkozy announced that the measures, besides the EU110 billion three-year loan to Greece, are a "rapid deployment" mechanism against financial speculation to be managed by the EU Commission, and a stricter mechanism of "governance" in the EU.

Sarkozy said that it was decided "to endow the Eurozone with a real economic government. We agree on strengthening economic and budget policies, on the revision of the Stability Pact by strengthening the system of sanctions, and on the deployment of a crisis management mechanism by strengthening the role of the Eurogroup."
“The important thing is not to stop questioning.”
-Albert Einstein

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