Count Chocula loves the attention. Can you blame him?
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Roubini Says A 'Sovereign' Bank Will Soon Crack, Crashing Credibility of Governments
- Thread starter ByLoSellHi
- Start date
Count Chocula loves the attention. Can you blame him?
Sovereign Bank, example the US Federal Reserve. If a Countries Central Bank fails then the country fails. If the country fails the central bank fails. Really very little difference. If one goes under they both do. That doesn't mean the country will cease to exist, but it will be insolvent and unable to borrow except under very unfavorable terms. Example, Argentina.
ah ha!!!!! After hours of diligent research, I've found it!!!!! I've scooped Roubini!!! The Sovereign about to crack is.........FREEDONIA.
Go to 1:20 marker. You'll see I am correct.
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Man. This is scary. I haven't seen it in years. All Rufus needs is a logo that reads "Leader Elect".
Go to 1:20 marker. You'll see I am correct.
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Man. This is scary. I haven't seen it in years. All Rufus needs is a logo that reads "Leader Elect".
This is from Roubini's website
"Moreover, in many countries the banks may be too-big-to-fail but also too- big-to-save, as the fiscal/financial resources of the sovereign may not be large enough to rescue such large insolvencies in the financial system.
Traditionally only emerging markets suffered â and still suffer - from such a problem. But now such sovereign risk â as measured by the sovereign spread - is also rising in many European economies whose banks may be larger than the ability of the sovereign to rescue them: Iceland, Greece, Spain, Italy, Belgium, Switzerland and, some suggest, even the UK.
The process of socializing the private losses from this crisis has already moved many of the liabilities of the private sector onto the books of the sovereign: banks, other financial institutions and, soon enough possibly, households and some important non-financial corporate companies.
At some point a sovereign [bank] may crack, in which case the ability of governments to credibly commit to act as a backstop for the financial system â including deposit guarantees â could come unglued.Thus, the L-shaped near-depression scenario is still quite possible â I assign to it a 30% probability - unless appropriate and aggressive policy action is undertaken by the US and other economies.This severe economic and financial crisis is now also leading to a severe backlash against financial globalization, free trade and the free markets economic model. "
Dunno to me he still talks about a sovereign bank.
To my mind if a bank like UBS goes then that will plunge Switzerland into crisis and that will plunge the entire world into a massive systemic crisis.
"Moreover, in many countries the banks may be too-big-to-fail but also too- big-to-save, as the fiscal/financial resources of the sovereign may not be large enough to rescue such large insolvencies in the financial system.
Traditionally only emerging markets suffered â and still suffer - from such a problem. But now such sovereign risk â as measured by the sovereign spread - is also rising in many European economies whose banks may be larger than the ability of the sovereign to rescue them: Iceland, Greece, Spain, Italy, Belgium, Switzerland and, some suggest, even the UK.
The process of socializing the private losses from this crisis has already moved many of the liabilities of the private sector onto the books of the sovereign: banks, other financial institutions and, soon enough possibly, households and some important non-financial corporate companies.
At some point a sovereign [bank] may crack, in which case the ability of governments to credibly commit to act as a backstop for the financial system â including deposit guarantees â could come unglued.Thus, the L-shaped near-depression scenario is still quite possible â I assign to it a 30% probability - unless appropriate and aggressive policy action is undertaken by the US and other economies.This severe economic and financial crisis is now also leading to a severe backlash against financial globalization, free trade and the free markets economic model. "
Dunno to me he still talks about a sovereign bank.
To my mind if a bank like UBS goes then that will plunge Switzerland into crisis and that will plunge the entire world into a massive systemic crisis.
Looks like Ireland or Spain are the leading candidates in the EU:
From: http://www.cnbc.com/id/29156803
From: http://www.cnbc.com/id/29156803
UPDATE 1-German, Irish, Belgian, Slovak CDS at record high
By: AFX | 12 Feb 2009 | 06:38 AM ET Text Size
By George Matlock LONDON, Feb 12 (Reuters) - The cost of protecting German, Irish, Belgian and Slovak government debt against default rose to a record high on Thursday, according to monitor CMA DataVision. Five-year credit default swaps (CDS) on German government debt climbed to a record 63.9 basis points from 62.3 basis points at the New York close on Wednesday, while the Irish equivalent broke above 300 basis points on Thursday, to a record high of 308.2 bps, CMA said. Belgian 5-year CDS shot up to a record high of 134.3 bps from 125.2 in New York on Wednesday, while Slovakia's 5-year CDS hit 237.5 bps from 233.5 bps. This means it would cost 63,900 euros to protect 10 million euros worth of German government bonds and 308,200 euros to protect 10 million euros of Irish government bonds. CMA said that Germany's risk of default over the course of the next five years had edged up as the CDS rate rose, such that there was a Cumulative Probability of Default (CPD) of 5.3 percent compared with 5.2 percent on Wednesday. The comparable CPD for Ireland was 22.8 percent, up from 21.1 percent on Wednesday; CPD on Belgium was 10.7 percent, up from 9.3 percent, and for Slovakia was 18.7 percent, up from 17.8 percent. "It is going to be a very, very busy day in the sovereign markets. We are seeing big moves and high volatility across the board," said one trader in London. Investors, fretting about the scale of financial rescue programmes to tackle recession, have been repricing risk of sovereign debt. CDS reflect bond investors' concern that major sovereign bonds' credit quality may slip in the future and comes after Moody's Investor Services placed Ireland and Spain in a "vulnerable" category in a report on triple-A rated nations earlier on Thursday. The category does not constitute a change in the rating or outlook for the countries but is a test of financial stress and attached risks. Investors, fretting about the scale of financial rescue programmes to tackle recession and about the prospects of their success, have been repricing risk of sovereign debt. "The moves in CDS rates are symptomatic of a problem going back 18 months," said Meyrick Chapman, strategist at UBS in London. "Belgium is leading this, with its banking and political-constitutional problems and explains why peripheral nations are wider. The tightening we have recently seen was in our view too far, too fast." (Editing by Stephen Nisbet) (george.matlock@reuters.com; Reuters Messaging: george.matlock.reuters.com@reuters.net; +44 20 7542 2508) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.
The PIIGS tightened quite a lot yesterday, so looks like Ireland, Greece and the others might be OK, after all. Besides, the Germans are making various noises that they will step in to prop up EU sovereigns if need be.Quote from Traden4Alpha:
Looks like Ireland or Spain are the leading candidates in the EU:
From: http://www.cnbc.com/id/29156803
Slovenia (Aa2/AA/AA) was a very interesting case earlier this month. They had a genuine liquidity problem, as admitted by the Economy Minister. To be able to make a â¬400MM redemption payment in March, they had to issue a new â¬1bn, which, thank god, they managed to do with decent subscription in the beginning of Feb.
I think Roubini is talking currency crisis in smaller countries whose banks were heavily geared.
Western European banks loaded up worse than American banks in all sorts of debt with their host nation's GDP a fraction of a fraction vis a vis the US.
Those central banks can't adequately debase and bail without creating a run on the currency because their economies are too small to absorb it. Austria expects Eastern Europe to default on something like 20% of its annual GDP, in terms of foreign mortgages held by local banks?? Then Germany reversed and said they'd bail Austria if happened.
Not much to do except EURO and USD bailout via the IMF or Worldbank.
Countries bailing out countries.
Western European banks loaded up worse than American banks in all sorts of debt with their host nation's GDP a fraction of a fraction vis a vis the US.
Those central banks can't adequately debase and bail without creating a run on the currency because their economies are too small to absorb it. Austria expects Eastern Europe to default on something like 20% of its annual GDP, in terms of foreign mortgages held by local banks?? Then Germany reversed and said they'd bail Austria if happened.
Not much to do except EURO and USD bailout via the IMF or Worldbank.
Countries bailing out countries.