1. The guy who was running for the CEO POST at Unicredito the amazing bank which just realized a loss of 15 bi. in the recent quarter is CEO of UBS – that seems to be a real considerate choice.
EU sovereign bonds are dropping every day except for Bunds which is a liqidity drag on all EU banks plus accumulation of losses and the CDS they might hold might be not a real hedge anyway – the air is geting very thin.
It is amazing how the depression of the 30ies of the last century repeats itself. It started with USA crashing but the seal to the deal was with the collapse of European banks in 1932. Now 3 years later again the same story only on a much bigger scale.
Crude oil reached the medium term traget of 100 and should rather pull back towards 90 the next 2 weeks as the Dollar is poised to rise.
The selling pressure of the big apple sell order seems to have done whatever he was doing and the stock participates again today, actually makes the rally go with a short term favorite HPQ.
We discussed the sudden and scary drop in the EUR-USD cross-currency basis swap last week and how it is perhaps a cleaner view of the funding crisis in Europe than the delinquent Libor market. Since our first discussion, the 3 Month EUR-USD basis swap has widened even further – only worse in the heart of the crisis in Q4 2008. As if that was not enough, GDP-weighted European Sovereign risk is back up to its highest levels ever as the clear message from the markets is the ring-fencing and backstopping of sovereigns and financials respectively is simply non-existent.
We all know some 3 trillion euros of debt in Europe is uncollectible. So why isn’t anyone talking about the one and only solution, which is writing off all that debt? Since nobody knows how much bad debt there actually is in the Eurozone–care to guess on the market value of all those underwater mortgages in Spain or the true size of Italy’s debts?–that 3 trillion is just a guess, but it’s probably a reasonable starting point. Let’s start with the most basic fact about all this uncollectible, impaired, bad debt: every euro of debt is somebody else’s asset. Wipe out the debt and you wipe out the asset. That’s why there’s no willingness to accept the writedown of debt: somebody somewhere has to suck up 3 trillion euros of loss. Can we please dispense with the fantasy “solutions”? There is no way Europe is going to “grow its way out of this debt.” How much of the eurozone’s “growth” was the result of rampant malinvestment and risky borrowing? More than anyone dares admit. It won’t take austerity to crash the euroland economy, all it will take is turning off the debt spigot…Life will go on if the banks are wiped out and closed, pension funds and insurance companies take losses, etc. If those who made the bets for their own private gain aren’t forced to absorb the risk, then we don’t live in either capitalism or democracy; we live in a financial-fascist tyranny.