Europe's Stress Tests

HenryTo · Posted: Sun Sep 27, 2009 12:13 am Post subject: Europe's Stress Tests

The European Union will release its own version of the stress tests in the next few days. Early estimates put the total 2009 and 2010 banking losses to be about €400 billion, or US$580 billion. Note that the IMF will also release its "Financial Stability Review" this Wednesday:

http://www.nytimes.com/2009/09/26/business/global/26banks.html?adxnnl=1&ref=global&adxnnlx=1254031609-d3tDdhlmKWPOp4NYXrVQdQ

rffrydr · Posted: Thu Oct 21, 2010 3:36 pm Post subject:

The language of love:

http://www.newsweek.com/2010/10/20/operation-escargot-flashballs-and-carla.html?from=rss
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Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Fri Jul 23, 2010 11:31 am Post subject:

Tom Graff
Euro CDS
7/23/2010 12:40 PM EDT

HenryTo · Posted: Fri Jul 23, 2010 11:04 am Post subject:

Not too much of a surprise, although the 3.5 billion Euro ($4.5 billion) capital raising target isn't too believable:

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aEaMRaVlDFDw

rffrydr · Posted: Fri Jul 23, 2010 8:11 am Post subject:

So "results" are still a couple hours ahead but already reaction to Europe's cultural stand on trading vs. holding.

Funny, Germany, the country demanding the highest standards is probably the least concerned with this. And so the eternal Anglo/Euro split goes on.
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Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Thu Jul 22, 2010 3:09 pm Post subject:

I don't see why sentiment can't take us higher here. This is typical:

http://www.cnbc.com/id/15840232/?video=1549032050&play=1

It will be said that their tests are nothing like ours. --A point I've continually hammered. Structured finance is the fundamental difference. Yes, holdings here lead to exposure there...and that sucks in unforeseen risks. But, this is the big BUT, opacity is not the issue. Structured finance strikes at the heart of markets: price and time. Time is what was really leveraged. And price, that was something to be adjudicated. These structures, at the local level, weren't toxic--they were discombobulating. Wall St's favorite axiom, "visibility" is turned inside out.

Take Greece, now.....please! So, say it's insolvent (which it isn't); say it's a "corporate" body (which it isn't); and say it's unrepentant (which it has already shown the world it most definitely is). Add it up...and subtract. 10 centimes on a euro? Impossible. 90? More probable. Tote up the french banks, multiply by .8. Throw in Portugul. Even throw in World's Cup champions, Spain. That's serious. But that's calculable.

Now add in the fact that these assets, properly, can be held-to-maturity. Now add in all the structured finance NOT on these banks balance sheets. Now add in all the european RE debt not bubbled, not leveraged--and the simple fact that they don't live in houses. I call it a wash.

Throw in a market panic, I call it a buy.

Now, if you're gonna crash china that's a different story. This selldown has been telling lots of stories. All at once. Isn't that the definition of a "panic." Idea

Oh, Greece is like individual in at least one way: it has powerful friends!
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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Thu Jul 22, 2010 10:58 am Post subject:

If five of six Greek's major banks are set to pass, then I don't see how we could be in systematic trouble (although no doubt the stress tests take into funds that are projected to be raised in the near future, a la Allied Irish Banks):

http://online.wsj.com/article/SB10001424052748703467304575382682256609918.html?ru=yahoo

Similarly, both the Bank of Ireland and the Allied Irish Banks are set to pass the stress tests as well:

http://noir.bloomberg.com/apps/news?pid=20601109&sid=aU3xmtdZ__A8&pos=10

rffrydr · Posted: Mon Jul 12, 2010 10:25 am Post subject:

This is the way it should be:

rffrydr · Posted: Wed Sep 30, 2009 11:17 am Post subject:

And the third interpretation: they just may not need as much.

http://ftalphaville.ft.com/blog/2009/09/30/74811/ecb-liquidity-monster-back-in-its-cage-for-now/

Results from the ECB’s latest 1-year financing auction, held on Tuesday, revealed that the central bank allotted €75.24bn to eurozone financial institutions, much less than the €137.5bn analysts had expected.
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Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Wed Sep 30, 2009 11:01 am Post subject:

They also cut their expected world writedown by half a trillion in the quarter, "blaming" FASB--big numbers changing faster than they should. That's the thing about leverage it cuts both ways--both ways.

German unemployment numbers has europe looking down their noses at us for now. Credit Paribas out from under govt. thumb this week. Lloyd's on deck. RBS getting mean, in on EVERY deal this year.

The fear is taking ratios back to nineties--there's just not enough money to do that. Therefore Question

I'd say we learn to live with our anxieties. 10-4% peak-to-trough with allowance for hybrid debt with a heavy dose of credit restructuring will be our travel-guide on this journey.
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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Wed Sep 30, 2009 8:04 am Post subject:

IMF's latest Financial Stability Report is released. Shows that Europe's banking system is as sick as ever:

http://blogs.ft.com/money-supply/2009/09/30/the-new-capital-of-europe/