Thread: Europe Goes Full Bailout Retard: EFSF Rescue Capital To Be O

Europe Goes Full Bailout Retard: EFSF Rescue Capital To Be Officially Double-Counted

Submitted by Tyler Durden on 10/23/2011 17:03 -0400
Comments: 274 / Reads: 21,965



Europe has officially entered the Tropic Thunder zone, where one, forget one thousand , monkeys armed with one simple solar-powered calculator, can come up with a better plan than (JP Morgan-advised) Europe. Because as we pointed out on Thursday, "nothing changes the fact that with €100 billion set aside for bank recaps, a woefully low number and one which will do nothing to assure investors that banks have sufficient capital, there is still not enough cash to "guarantee" all future issuance" - well it appears that Europe finally did the math which led us to conclude that the EFSF is DOA. So what is Europe's solution? Why double counting aid already pledged of course: "EU bank plan may include aid already pledged to bailout states-sources." Uh, what? "A drive to lift bank capital across Europe by up to 110 billion euros ($153 billion) is expected to include the roughly 46 billion euros already pledged to Ireland, Greece and Portugal to help their lenders, EU sources told Reuters....Another official confirmed the intention to count money already earmarked for banks in Ireland, Greece and Portugal in any recapitalisation plan. "The problem with shock and awe numbers is that it implies that the money is there," said one official, reflecting on ministers' reluctance to set public goals for recapitalisation. "But governments don't have the money."... Just as was repeated here over and over and over and over... And yes, that red stuff shooting out of the place where your head was a few second ago, is blood. It is now Europe's official "plan" (for at least the next 2-3 hours) to use mystical, magical money, which is somehow double-counted to bail out both a bank and a country at the same time...

Ugh:

If over a third of the EU's bank recapitalisation drive, which investors hoped would inject more than 100 billion euros of fresh money, is accounted for under old bailout programmes markets are likely to react with disappointment.

It would effectively shrink the overall package, designed to protect EU banks from the fallout of a Greek default and ease their borrowing difficulties amid a creeping credit freeze, from more than 100 billion euros to something around 60 billion.

It would also rest the burden for EU bank recapitalisation in large part on Spain, Italy and France, which one official said together accounted for roughly 45 percent of the overall shortfall found in recent checks of EU banks by supervisors.

The matter is due to be discussed in the run-up to Wednesday's second summit of European leaders and countries may yet change tack to increase the planned boost for banks.

...

Well, it's official: the lunatics have taken over the Titanic.

http://www.zerohedge.com/news/europe-go ... le-counted

Watch Merkozy Cracking Up Following Question If Italy Can Implement Reforms

Submitted by Tyler Durden on 10/23/2011 19:52 -0400
Comments: 153 / Reads: 24,305

Even our non-polyglot readers will have zero problems understanding the response (in French) by Merkozy, when asked during the press conference, whether Italy, which has the second largest debt load in Europe at $2.2 trillion and inches behind German, http://www.economist.com/content/global_debt_clock will succeed in implementing promised 'reforms.' The wholesale laughter 19 seconds in the the clip, by not only the entire audience, but by Merkel and Sarkozy pretty much explains what the "next steps" in Europe are as the continent has now given up any pretense it is even trying to keep a serious facade on the upcoming serial defaults... and why 10 Year BTPs will need much more than just the SMP, EFSF and the hand of god to stay above 90 in the coming week.

Video: http://tv.repubblica.it/copertina/bruxe ... 9013?video



Source: La Repubblica

As for the question of why Italy provokes laughter, we are not too sure. After all, as Italy goes, so does the world.

As a reminder...



And...The truth about Italy: http://www.zerohedge.com/news/summaizin ... let-points

Morgan Stanley estimates net issuance should total 35 billion euros per year in 2012-2013, less than expect annual coupon payments of around €45 billion per year

A total of €157 billion in Italian government paper will fall due by the end of the year. Redemptions will peak in September, when €46 billion of BTP CTX bonds mature

Italy has raised €277.4 billion euros in debt so far in 2011, or 65.3% of its full-year target, the Treasury said - suggesting further issuance of €147.4 billion, according to Reuters calculations

Italy's public debt stood at €1,890 billion at the end of April, according to Bank of Italy figures. The public debt figure includes postal savings
Italian government bonds and short-term bills totaled €1,583 billion at the end of June according to Italian Treasury data. Their average term was 7.09 years

A one percentage point increase in Italy's debt yields adds about €3 billion euros to interest payments in the first year, and twice that in the second, the Bank of Italy has said

Italy forecast in April that 2011 debt servicing costs would total 4.8% of GDP, or about €77 billion

The International Monetary Fund estimated in April that 47% of Italian 2010 government debt was held abroad. Morgan Stanley last week estimated foreign holdings at 44%

Banks domiciled in Italy held €192 billion in Italian government securities at the end of May, Bank of Italy data showed last month. In the first quarter of 2011 they also held €589 billion euros in government securities on behalf of their clients

European Banking Authority data showed in July that Italy's five lending retail banks had a net direct exposure to Italian sovereign debt of €159 billion. Intesa Sanpaolo is the most exposed with €57.6 billion, followed by UniCredit with €47.5 billion

Morgan Stanley said domestic banks and insurance companies could quite easily buy net €60 billion a year in Italian government debt for the next few years

JP Morgan analysis said Italian banks will have to refinance €53 billion of maturing bonds in wholesale markets next year

The €600 billion Italian pension fund and insurance industry has increased its holdings of domestic government bonds by 10% in the last three years to 32% of assets, according to JP Morgan

Analysts estimate that an increase in the average cost of Italian public debt drives a similar rise in the cost of banks' bond issues

JP Morgan and Morgan Stanley analysts estimate Italian banks' holdings of government bonds at around 6% of their assets - a higher figure than 5% for Spanish banks and second only within the euro zone to Greek banks' 10%

h/t Stock_Bitch

http://www.zerohedge.com/news/watch-mer ... nt-reforms

Guest Post: The European Financial Crisis In One Graphic: The Dominoes Of Debt

Submitted by Tyler Durden on 10/23/2011 13:25 -0400
Comments: 76 / Reads: 19,425
many links and graphice on ths article



http://www.zerohedge.com/news/guest-pos ... inoes-debt