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Sun Jun 24, 2012, 09:19 PM

Simon Johnson: U.S. Banks Arenít 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 canít 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 anotherís 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.

Whatís more, they also need to worry a great deal about what the repricing of risk will do to the worldís 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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Reply Simon Johnson: U.S. Banks Arenít Nearly Ready for Coming European Crisis (Original post)
marmar Jun 2012 OP
AnotherMcIntosh Jun 2012 #1
freshwest Jun 2012 #2
AnotherMcIntosh Jun 2012 #5
Iggy Jun 2012 #3
freshwest Jun 2012 #6
Autumn Jun 2012 #4
Zalatix Jun 2012 #7
Prometheus Bound Jun 2012 #8
marmar Jun 2012 #10
Prometheus Bound Jun 2012 #11
xchrom Jun 2012 #9

Response to marmar (Original post)

Sun Jun 24, 2012, 09:26 PM

1. Not ready? Won't they just ask the recipients of their donations for another bail-out?

 

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Response to AnotherMcIntosh (Reply #1)

Sun Jun 24, 2012, 09:58 PM

2. We had a thread yesterday saying Bernanke was bailing them out with Federal Reserve funds.

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.

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Response to freshwest (Reply #2)

Mon Jun 25, 2012, 12:36 AM

5. Thanks for the add'l information. What I know for sure is that which gets rewarded gets repeated.

 

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Response to marmar (Original post)

Sun Jun 24, 2012, 10:27 PM

3. OK, What's it Going

 

to cost us this time?

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

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Response to Iggy (Reply #3)

Mon Jun 25, 2012, 12:49 AM

6. FDIC? Is that the plan? All the funds are tight.

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Response to marmar (Original post)

Sun Jun 24, 2012, 10:42 PM

4. No need to worry about if JPMorgan can withstand this.

They have unlimited funds, the American taxpayer.

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Response to Autumn (Reply #4)

Mon Jun 25, 2012, 03:47 AM

7. The American taxpayer doesn't have unlimited funds.

 

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Response to marmar (Original post)

Mon Jun 25, 2012, 04:04 AM

8. "The COMING European crisis." Har Har, that's a good one.

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

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Response to Prometheus Bound (Reply #8)

Mon Jun 25, 2012, 06:28 AM

10. I suspect his point is that it's going to get much worse.

nt

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Response to marmar (Reply #10)

Mon Jun 25, 2012, 07:02 AM

11. You're right.

I was just having fun.

And there's no doubt it's going to get much worse.

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Response to marmar (Original post)

Mon Jun 25, 2012, 05:22 AM

9. We live in interesting times. Nt

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