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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Today the Swiss National Bank intervened into the Euro market and bought "heaps" of Euro in order to stabilize the ongoing devaluation. The effect lasted for a mere three hours...




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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Quote

    Euro 'will be dead in five years'

    The euro will have broken up before the end of this Parliamentary term, according to the bulk of economists taking part in a wide-ranging economic survey for The Sunday Telegraph.


    The single currency is in its death throes and may not survive in its current membership for a week, let alone the next five years, according to a selection of responses to the survey – the first major wide-ranging litmus test of economic opinion in the City since the election. The findings underline suspicions that the new Chancellor, George Osborne, will have to firefight a full-blown crisis in Britain's biggest trading partner in his first years in office.

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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Quote

    EU 'to vet British Budget before Parliament'

    The European Union will vet the Chancellor's Budget before it is debated by MPs in the House of Commons or seen by the public, under plans agreed last night.

    David Cameron faces a major row over the “budgetary surveillance” demand when the Prime Minister attends his first EU summit next Thursday.

    Britain was isolated during a meeting of an “economic government taskforce”, chaired by Herman Van Rompuy, the EU President, last night.

    Mr Van Rompuy and the European Commission have tabled plans that will require all of Europe’s governments to discuss their budget plans with other EU finance ministers and officials before they presented to national parliaments.

    “A government presenting a budget plan with a high deficit would have to justify itself in front of its peers, among finance ministers,” said Mr Van Rompuy.

    “There would still be time to adjust plans before the final budget plans are presented.”

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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Quote Posted by bashi (here)
    [SIZE="3"][COLOR="DeepSkyBlue"]Today the Swiss National Bank intervened into the Euro market and bought "heaps" of Euro in order to stabilize the ongoing devaluation. The effect lasted for a mere three hours...
    The Swiss National Bank intervened for the last 6 weeks or so, they bought about 100 billions of Euro reserves.

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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Quote

    Gold reclaims its currency status as the global system unravels

    We already know that the eurozone money markets seized up violently in early May as incipient bank runs spread from Greece to Portugal and Spain, threatening the first big sovereign default of our era. Jean-ClaudeTrichet, the president of the European Central Bank (ECB), talked days later of "the most difficult situation since the Second World War, and perhaps the First".


    Last week gold surged to an all-time high of $1,258 an ounce Photo: Alamy

    The ECB’s latest monthly bulletin gives us some startling details. It reveals that the bank’s "systemic risk indicator" surged suddenly to an all-time high on May 7 as measured by EURIBOR derivatives and stress in the EONIA swaps market, exceeding the strains at the height of the Lehman Brothers crisis in September 2008. "The probability of a simultaneous default of two or more euro-area large and complex banking groups rose sharply," it said.

    This is a unsettling admission. Which two "large and complex banking groups" were on the brink of collapse? We may find out in late July when the stress test results are published, a move described by Deutsche Bank chief Josef Ackermann as "very, very dangerous".

    And are we any safer now that the EU has failed to restore full confidence with its €750bn (£505bn) "shock and awe" shield, that is to say after throwing everything it can credibly muster under the political constraints of monetary union? This is the deep angst that lies behind last week's surge in gold to an all-time high of $1,258 an ounce.

    The World Gold Council said on Friday that the central banks of Russia, the Philippines, Kazakhstan and Venezuela have been buying gold, and Saudi Arabia’s monetary authority has "restated" its reserves upwards from 143m to 323m tonnes. If there is any theme to the bullion rush, it is fear that the global currency system is unravelling. Or, put another way, gold itself is reclaiming its historic role as the ultimate safe haven and benchmark currency.

    It is certainly not inflation as such that is worrying big investors, though inflation may be the default response before this is all over. Core CPI in the US has fallen to the lowest level since the mid-1960s. Unlike the blow-off gold spike of the Nixon-Carter era, this rally has echoes of the 1930s. It is a harbinger of deflation stress.

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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Quote

    Germany could cause euro collapse: Soros

    German’s budget savings policy risks destroying the European project and a collapse of the euro cannot be ruled out, billionaire investor George Soros said in a newspaper interview released on Wednesday.

    “German policy is a danger for Europe, it could destroy the European project,” he told German weekly Die Zeit.

    Mr. Soros, who earned $1-billion in 1992 by betting against the British pound, added that he “could not rule out a collapse of the euro.”

    “If the Germans don’t change their policy, their exit from the currency union would be helpful for the rest of Europe,” he said.

    Chancellor Angela Merkel unveiled plans earlier this month for €80-billion ($107-billion) in budget cuts over the next four years – a package she hopes will bring Germany’s structural deficit within European Union limits by 2013.

    “Right now the Germans are dragging their neighbours into deflation, which threatens a long phase of stagnation. And that leads to nationalism, social unrest and xenophobia. Democracy itself could be at risk,” Mr. Soros said.

    “Germany is globally isolated ... Why don’t they let their salaries rise? That would help other EU states to pick up.”

    Ms. Merkel on Monday defended her budget cut plans after U.S. President Barack Obama preached patience in clamping down on public spending. A German government official said on Tuesday Berlin did not expect to come under pressure at a G20 summit in Toronto this weekend to provide fresh stimulus measures.

    Unquote

    Source

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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    After Hitting 1,100bps In Spread, Greece Finally Relents And Puts (Parts of) Itself Up For Sale
    by ZeroHedge
    A quick list:
    Stimulus- not working - as suspected
    Constant danger of defaulting - check
    Rumors of either club med leaving Euro (unlikely) or Germany creating Neues Euro (more possible)- check
    Ah, and Bernake contemplating another QE (printing) run, up to $5Trillion, Geithner and Krugman laughed out Euro capitals ... check

    On more serious note, above story was put by Guardian first, wonder if it'd be debunked or confirmed

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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    I heard about the sale of Greek islands on the Italian TV.

    Here is something that I found on the net:

    http://sofiaecho.com/2010/06/25/9227...or-sale-report

    Quote The Greek government has decided that a part of the popular island of Mykonos, one of the country's most prominent tourist destinations, should be put for sale, in a desperate attempt by the state to generate some cash and fight its astronomical debt, the UK Guardian reported.

    There are more than 6000 islands in Greece, of which only 227 are populated. The Greek government has been unable to develop basic infrastructure, or police most of its islands, thus foreign investment might be needed for that to happen. .

    This could happen, either through a sale or a a long-term lease. The Private Islands website lists 1235-acre Nafsika, in the Ionian sea, on sale for 15 million euro, the report said.

    The patch for sale is one-third owned by the government, which is looking for a buyer "willing to inject capital and develop a luxury tourism complex", the Guardian reported, citing a "trusted source close to the ongoing negotiations".

    Property on the island of Rhodes, isalso being eyed up investors, mostly Russian and Chinese, the report said.

    Russian and Chinese investors want to find suitable holiday destinations for their increasingly affluent populations in the Mediterranean country.

    Greece was forced to accept a €110bn bailout by the EU and the IMF last month, following a decade of overspending which has left the country's financial books in tatters.

    Meanwhile, tourists travelling to and from Greek islands continue to be hit by strikes and the closures of the port, which, according to the Greek daily Kathimerini, are set to continue.

    The Greek communist party KKE blocked access to ferries protest the government’s plans to lift cabotage restrictions.

    Thousands of tourists were stranded at Piraeus and other ports around the country on June 24 after a 400 strong crowd of KKE and affiliated labor union Pame blocked the boarding ramps of several ferries during a 24-hour strike against austerity measures being pushed through by the debt-ridden government, the report said
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    Default Euro heading for a storm


    These are snippets:

    Spain's banks are freaking out right now about the possibility that the ECB might take away its special €442 billion funding facility, according to the FT.

    Since one year there is a monetary facility provided by the ECB, which was used to inject additional cash into the financial system.

    This facility, will expire this week, on the 1st July, without any back-up plans by the ECB.

    The ECB's plan to allow the funding facility to expire have been labeled "absurd" by Spanish banks lobbying for its continuation.

    You can see what Spanish banks are worried about. Here's a chart detailing the liquidity drop off if the ECB allows the fund to expire on July 1:




    Various colours for different monetary tools. The anticipated sharp drop is obvious.

    Additional a covered bond purchase scheme by the ECB (in grey) also expires as it has reached its threshold of 60 Billion €.

    Add this to the Spanish government's funding need for July and there is a serious combination of problems facing the country. Here a list of impending spanish bond auctions:




    Spain faces a confluence of events in July, whereby it will need to finance 21.7 billion euros within a single month. This combines shortfalls in its budget and a wave of scheduled government debt redemptions.

    AND: The 5yr bond auction takes place the same day the monster ECB facility expires.

    Spain’s banks are freaking out right now about the possibility that the ECB might take away its €442 billion funding facility, according to the FT.

    Can this get any crazier, or what?

    YES !


    Lets have a look at the ECB:

    Even the ECB has to get its liquidity from somewhere.
    The main financial instrument for this purpose are socalled Reverse Transactions:

    "Reverse transactions refer to operations where the Eurosystem buys or sells eligible assets under repurchase agreements or conducts credit operations against eligible assets as collateral."
    source: http://www.ecb.int/pub/pdf/other/gendoc2008en.pdf

    These instruments had been used to inject liquidity in to the system. But now they’re coming due, and it seems as if inflation is not the issue to worry about and hasn’t been for a while:
    Take a look at how much is now owed to the ECB:

    http://professorpinch.files.wordpres...ps-6-25-10.png


    "For the small facility on 6/30:
    (€151.5114bn)[1+((7/360)(1%))] = €151.5409bn
    For the large facility due on 7/1:
    (€442.2405bn)[1+((371/360)(1%))] = €446.7980bn

    The banks are going to have to come up with this cash within the next days."

    The ECB will have to announce a new facility to roll all of the collateral that has been pledged and the banks can keep the Euros the ECB lent them. For now, anyway. But there has been no indicator they’re working on this. A lot of uncertaincy exisists who can honour them...

    Better find something to hold on to and brace for impact…


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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Surprise Surprise Surprise!
    Greece is Restructuring Debt Now
    For now "just" State Hospital System ... but will the others follow?

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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    For anyone still interested:
    Der Spiegel : Creating Order in the Euro Zone:Merkel's Rules for Bankruptcy
    Comment from zerohedge:
    Quote Posted by ZeroHedge
    new insolvency trustee (...) would take implicit control over and override a default nation's treasury, in essence pushing the bankrupt country into a form of Feudal vassal state-cum-reparations subservience. Welcome to financial warfare in the post-globalization period.

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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Seven EU Banks Fail Tests With $4.5 Billion Shortfall
    Quote By Jann Bettinga and Charles Penty - Jul 23, 2010

    Seven of the 91 European Union banks subject to stress tests failed with a combined capital shortfall of 3.5 billion euros ($4.5 billion), stirring concern the evaluations were too lenient.

    Hypo Real Estate Holding AG, Agricultural Bank of Greece SA and five Spanish savings banks have insufficient reserves to maintain a Tier 1 capital ratio of at least 6 percent in the event of a recession and sovereign-debt crisis, lenders and regulators said today.

    The banks are in “close contact” with national authorities over the results and the need for more capital, said the Committee of European Banking Supervisors, which coordinated the tests. Governments are seeking to reassure investors about the health of financial institutions after the debt crisis pummeled the bonds of Greece, Spain and Portugal.

    “The amount of capital needed is much lower than the market expected,” said Mike Lenhoff, London-based chief strategist at Brewin Dolphin Securities Ltd., whose parent company oversees $33 billion. “The amount does seem quite trivial considering the concerns about losses from the sovereign crisis.”

    Part of the reason the amount of capital needed was lower than analysts predicted may be because the evaluations took into account potential losses only on government bonds the banks trade, rather than those they are holding to maturity. That means the tests ignored the majority of banks’ holdings of sovereign debt.

    What’s more, European banks have raised 220 billion euros in the last 15 to 18 months, which dwarfs the amount of money that U.S. banks raised following their stress tests, Credit Suisse Group AG analysts said in a note this week.

    Test Criteria

    Still, estimates for the amount banks would need to raise ranged from 30 billion euros at Nomura Holdings Inc. to as much as 85 billion euros at Barclays Capital. Tests carried out in the U.S. last year found 10 lenders including Bank of America Corp. and Citigroup Inc. needed to raise $74.6 billion of capital.

    “The long awaited stress tests do not seem to have been that stressful after all,” said Gary Jenkins, an analyst at Evolution Securities Ltd., in a note. “The most controversial area surrounds the treatment of the banks’ sovereign debt holdings.”

    The results were released after the close of European stock markets. The euro was little changed against the dollar, falling 0.02 percent to $1.2896 as of 7:39 p.m. in London.

    Bond Losses

    Regulators tested portfolios of sovereign five-year bonds, assuming a loss of 23.1 percent on Greek debt, 12.3 percent on Spanish bonds, 14 percent on Portuguese bonds and 4.7 percent on German state debt, according to CEBS.

    The tests also assessed the impact of a four-step credit rating downgrade on securitized debt products, a 20 percent slump in European equities in both 2010 and 2011 and 50 other macroeconomic parameters, including an economic contraction in the EU, according to CEBS.

    In Germany, Hypo Real Estate, the commercial-property lender rescued by the government following the financial crisis, was the only bank to fail among the 14 that were tested. Its capital ratio dropped to 4.7 percent in the most severe scenario, said the Bundesbank and the nation’s financial regulator, BaFin.

    The German bank has a capital shortfall of about 1.25 billion euros. An “immediate need for capital would arise only if the hypothetical stress scenario actually did materialize,” the Bundesbank and BaFin said. Germany’s Soffin bank-rescue fund already provided Hypo Real Estate with more than 7 billion euros in funds through the end of June.

    Spanish Banks

    Agricultural Bank of Greece, 77 percent owned by the Greek state, reported a shortfall of 242.6 million euros and said it would proceed with a share capital increase.

    Spain, with 27 tested banks, makes up the biggest portion of the exams. The savings banks that failed were CajaSur; a merger group led by Caixa Catalunya; a group led by Caixa Sabadell; Caja Duero-Caja Espana, and Banca Civica. Spain’s largest bank, Banco Santander SA, maintained its Tier 1 capital ratio at 10 percent under the most stringent scenario.

    The savings banks have a combined capital shortfall of about 2 billion euros, according to documents posted on the CEBS website. Bank of Spain Governor Miguel Angel Fernandez Ordonez said the central bank will set a deadline for savings banks to raise new capital privately, before turning to public funds. The end of the year would be a reasonable deadline, although it could be brought forward, he said. Banca Civica today announced plans to raise 450 million euros by selling bonds convertible into shares to J.C. Flowers & Co., a U.S. buyout firm.

    Near the Threshold

    Banks that showed a drop in capital to near the 6 percent threshold include Greece’s Piraeus Bank SA, with a ratio of 6 percent, Allied Irish Banks Plc, with 6.5 percent, Italy’s Monte Dei Paschi di Siena SpA, with 6.2 percent, and Nova Ljubljanska Banka in Slovenia, with 6.3 percent.

    Norddeutsche Landesbank, a German state-owned lender, and Deutsche Postbank AG, the German retail bank partially owned by Deutsche Bank AG, reported ratios of 6.2 percent and 6.6 percent, respectively, in the sovereign-shock scenario.

    In France, BNP Paribas, Societe Generale SA, Credit Agricole and BPCE SA each have enough capital to outlast an economic slump and a sovereign debt crisis, the Bank of France said. In Britain, HSBC Holdings Plc, Barclays Plc, Lloyds Banking Group Plc, and Royal Bank of Scotland Group Plc passed the tests, the Financial Services Authority said.

    The evaluations, which came two years after the U.S. subprime mortgage crisis roiled global financial markets, cover 65 percent of the EU banking industry.

    Publication of stress-test results in the U.S. helped lift the Standard & Poor’s Financials Index 36 percent from the start of May through the end of last year.

    To contact the reporters on this story: Jann Bettinga in Frankfurt at jbettinga@bloomberg.net; Charles Penty in Madrid at cpenty@bloomberg.net.
    http://www.bloomberg.com/news/2010-0...shortfall.html
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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    I just found this, too...puts a little twist in the validity of the Stress Test...

    Seven banks fail EU stress tests

    http://edition.cnn.com/2010/BUSINESS...id=8a_z1moym_s

    Quote (FT) -- Only seven of 91 European banks failed a long-awaited stress test, regulators announced last night, a result that risks undermining the credibility of an exercise designed to restore the market's confidence in the region's banking sector.

    Five of the seven were cajas, Spanish savings banks, sparking nervousness that the pan-European exercise that Spain had called for might backfire.

    The Bank of Spain was last night discussing what kind of contingent liquidity measures could be put in place to reassure caja customers and counter any threat of a run on these banks.

    Q&A: EU stress test explained

    The Committee of European Banking Supervisors said there was a capital shortfall of €3.5bn at the seven banks that failed to reach the pass mark of a 6 percent tier one capital ratio.

    The test involved modelling macroeconomic and sovereign debt stresses over 2010 and 2011, applied to end-2009 capital levels.

    Germany's Hypo Real Estate and Greece's ATEbank were the only non-Spanish institutions to fail.

    Among the near-fails, which analysts say could come under pressure to raise capital soon, were Italy's Monte dei Paschi, on 6.2 per cent, and Germany's Postbank, on 6.6 per cent.

    A handful of some of Europe's most-stretched banks announced a combined €1.3bn of capital raisings on Friday, just hours before regulators divulged the results of the test, although two of them -- National Bank of Greece and Slovenia's NLB -- both passed.

    The third, Spain's Cívica, a caja that failed the test, secured €450m of convertible bond finance from JC Flowers, the US buy-out firm that has a record of investing in troubled banks.

    That marked the first time a caja had sought outside capital, following a liberalisation of the law governing the public sector institutions.

    Among the top-rated banks in the tests was Barclays, the UK bank whose baseline tier one ratio of 13 per cent at the end of last year rises under the stress scenario to 13.7 per cent by end-2011.

    The two-month-long test exercise has been closely scrutinised by investors, with growing scepticism in the markets that the parameters of the stress scenarios were insufficiently tough.

    Germany also upset the pan-European exercise at the last minute by say its banks would be disclosing the full details of sovereign debt holdings -- an adjunct to the stress tests that all banks had been expected to comply with -- only on a voluntary basis.

    At least six German banks -- including Deutsche Bank, Postbank, HRE and DZ Bank -- did not publish sovereign holdings on Friday night.

    "Arguably the failure here is not the banks concerned but the test itself," said Richard Cranfield, chairman of the global corporate group at Allen & Overy, the law firm.

    "There is little evidence that the tests have been applied consistently and there is a distinct lack of credibility, making this a wasted opportunity.

    "One assumes those banks that have failed will be rescued or recapitalised. However, the banks that have scraped through may have more of a challenge on their hands and they may be the ones the market focuses on," he said.

    But European regulators hailed the results of the tests -- which they said were three times as tough as last year's US tests -- as proof of the strength of the industry.

    "The US did its tests before all its banks had recapitalised," said Christian Noyer, governor of the Banque de France.

    "European banks have now been through recapitalisations, restructurings, cleaning out of their portfolios. We're arriving after the battle. A few years ago it would have been different."

    © The Financial Times Limited 2010
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    Action without vision just passes the time.
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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Here's something a wee bit more concrete. Despite EU banks "surviving" the stress test (One minute on treadmill at the lowest setting) EULIBOR is at its highest level in almost a year. This is the interest rate charged by banks to banks for overnight loans. So the EU banks do not believe in stress test or thy neighbor bank.

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    Default Re: Euro will collapse, 'Pig States' to bring EU down


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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Czech president tells UN to stay out of economics

    Quote UNITED NATIONS, Sept 25 (Reuters) - Czech President Vaclav Klaus on Saturday criticized U.N. calls for increased "global governance" of the world's economy, saying the world body should leave that role to national governments.

    The solution to dealing with the global economic crisis, Klaus told the U.N. General Assembly, did not lie in "creating new governmental and supranational agencies, or in aiming at global governance of the world economy."

    "On the contrary, this is the time for international organizations, including the United Nations, to reduce their expenditures, make their administrations thinner, and leave the solutions to the governments of member states," he said.
    http://uk.reuters.com/article/idUKN259750420100925

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    Default More Investors Betting Ireland Will Go the Way of Greece

    More trouble:

    Irish 10yr bonds currently trade 460bps over Bunds, their worst levels of the year, adding nearly 60bps to spreads in just the last week alone.


    http://seekingalpha.com/article/2275...ce?source=feed

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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    Greetings
    If someone had a thousand dollars of 'silver certificates'...would the US treasury cash out at todays' spot price? How would these dollars be treated?
    Blessings

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    Default Re: Euro will collapse, 'Pig States' to bring EU down

    It seems that trouble is brewing again:

    "Irish yields have jumped sharply since October, accelerating the rise this week as investors dumped Irish paper on growing worries Dublin will be forced to seek a bailout."

    http://www.marketwatch.com/story/ire...teid=rss&rss=1

    and that might be the beginning of something very BIG:

    It is so serious that EU's usually conservative Jean-Claude Trichet had to "pull a Bernanke" as he becomes the buyer of ONLY resort in the EU's bond market as failures in Irish and Portuguese bond auctions threaten to spread to much larger Spain:

    http://www.bloomberg.com/news/2010-1...s-worsens.html

    It seems that this has not stopped the viral financial fire:

    Spanish Bonds at Risk as Contagion Gathers Force !

    http://www.businessweek.com/news/201...ro-credit.html

    So what should happen? The G20 meeting should have addressed this development in a decisive manner. They have not been able to get the message across in the past, will they this time?

    The G20 is over and nothing happend.
    Obama has been called on the carpet for a more private meeting with the US's two biggest creditors, Japan and China. Angela Merkel, who has been very critical of US policy, was not invited to attend.
    But Merkel and Hu Jintao ganged up and prevented any binding declaration on restrictions for export oriented economies.

    The result: No big story..., but that was needed to cool the market.
    Trichet has only 60 Bln at his disposal, just a fraction of the more that 750 bln packet which was decided on earlier this year. That will never be enough to stem the tide if Portugal and Spain also have to be "bailed" out. For the rest of the money, Merkel will have a say...
    and the fire spreads fast:

    "Ireland Urged to Take Aid by European Officials"

    "The premium that investors demand to hold Irish 10-year sovereign bonds over the benchmark German bonds was 564 basis points at 3:59 p.m. in London, down from a record 646 points yesterday."

    http://www.businessweek.com/news/201...officials.html

    They are now begging to take the financial medicine in time, before it spreads.

    How will it respond? Maybe it balances itself out for now, but everybody should be able to see what is coming....and it is coming fast.


    Last edited by bashi; 13th November 2010 at 19:19.

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