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marmar

(76,976 posts)
Sun Jun 24, 2012, 09:19 PM Jun 2012

Simon Johnson: U.S. Banks Aren’t Nearly Ready for Coming European Crisis


(Bloomberg) The euro area faces a major economic crisis, most likely a series of rolling, country-specific problems involving some combination of failing banks and sovereigns that can’t pay their debts in full.

This will culminate in systemwide stress, emergency liquidity loans from the European Central Bank and politicians from all the countries involved increasingly at one another’s throats.

Even the optimists now say openly that Europe will only solve its problems when the alternatives look sufficiently bleak and time has run out. Less optimistic people increasingly think that the euro area will break up because all the proposed solutions are pie-in-the-sky. If the latter view is right -- or even if concern about dissolution grows in coming months -- markets, investors, regulators and governments need to worry not just about interest-rate risk and credit risk, but also dissolution risk.

What’s more, they also need to worry a great deal about what the repricing of risk will do to the world’s thinly capitalized and highly leveraged megabanks. Officials, unfortunately, appear not to have thought about this at all; the Group of 20 meeting and communique last week exuded complacency and neglect. ....................(more)

The complete piece is at: http://www.bloomberg.com/news/2012-06-24/u-s-banks-aren-t-nearly-ready-for-coming-european-crisis.html



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freshwest

(53,661 posts)
2. We had a thread yesterday saying Bernanke was bailing them out with Federal Reserve funds.
Sun Jun 24, 2012, 09:58 PM
Jun 2012
Bernanke bails out Europe

http://www.democraticunderground.com/1002848960

Is this article an announcement that we will have to make another bailout if they don't make good on that transaction with us?

I feel there's a lot of fear mongering by those who selling solutions for profit, that aren't going to change what is a systematic problem. I'm trying to not worry, just being careful personally.

Obama kept saying something about September a few months ago in a budget disagreement. It seems a lot of these big payments the article is talking about hit in certain quarters.

If you got anything for me here, help. There is the China news coming out, too, and I'm not that great on any of this. TIA.

 

Iggy

(1,418 posts)
3. OK, What's it Going
Sun Jun 24, 2012, 10:27 PM
Jun 2012

to cost us this time?

U.S. banks not prepared--- no long term plan. what else is new?

Autumn

(44,743 posts)
4. No need to worry about if JPMorgan can withstand this.
Sun Jun 24, 2012, 10:42 PM
Jun 2012

They have unlimited funds, the American taxpayer.

Prometheus Bound

(3,489 posts)
8. "The COMING European crisis." Har Har, that's a good one.
Mon Jun 25, 2012, 04:04 AM
Jun 2012

I'd say they're right smack in the middle of a crisis.

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