Thread: Slovenian Government Collapses in EU contagion cascade

Slovenian Government Collapses After Confidence Vote Loss; EFSF Ratification To Be Delayed Until 2012

Submitted by Tyler Durden
09/20/2011 12:03 -0400
Comments: 68 / Reads: 5,523

As expected earlier, the next domino in the European contagion cascade, has just tumbled after the local government has collapsed following loss of parliamentary confidence vote.

SLOVENIAN GOVT LOSES PARLIAMENTARY CONFIDENCE VOTE - BBG
This means that the pan-European EFSF vote, originally scheduled to be completed by the end of this month, will likely be delayed until 2012 which means at least 4 more months of SMP bond purchases and more anger at direct ECB monetization of Peripheral debt.

http://www.zerohedge.com/news/slovenian ... d-until-20

Global Systemic Risk Near Record Highs Prompts ESRB Warning

Submitted by Tyler Durden
09/20/2011 10:25 -0400
Comments: 83 / Reads: 9,480

We have been pointing to the incessant rise in the risk of the Financial Stability Board's most systemically important entities for weeks now. It appears the European Systemic Risk Board http://www.esrb.europa.eu/home/html/index.en.html has, according to Dow Jones, issued its first warning to governments, urging them to prepare capital injections for some European banks.



The ESRB urged governments to prepare capital injections for banks which failed or came close to failing the bank stress tests earlier this year. Europe remains, marginally, the weakest region from the perspective of financial risk but we note how the Asian region was initially unharmed but as 2011 has developed, risk has spread contagiously into that region's financial system also.



And while many would argue that CDS are more 'hysterical', we point to the increasing separation between the 'haves' and 'have-nots' in Europe, as EUR Libor components continue to disperse.



It seems the market is 'sorting' the French and Swiss bank funding issues out itself...

http://www.zerohedge.com/news/global-sy ... rb-warning

On The Imminent Slovenian Government Collapse And Greek T-Bills

Submitted by Tyler Durden
09/20/2011 10:24 -0400
Comments: 32 / Reads: 4,959

From Peter Tchir of TF Market Advisors

Slovenia and Greek T-Bills

It looks like the Slovenian Government may collapse today. It is one of the smallest EU members, but an EU member nonetheless. Slovenia accounts for about 0.5% of EFSF and is Aa2/AA

Looks like Greece won't default today, though it seems that more and more people think it is the likely outcome, and actually think it is the best outcome from Europe. Stocks continue to rally on every bit of good news related to Greece, but there is a growing consensus that Greece should default sooner than later, and that it would be easier for Europe to deal with that, than the eventual default.

Still waiting for the "private sector initiative" results on Greece. I really am not sure how much of a benefit Greece gets, but the banks transfer about 40% of their Greek exposure to EFSF exposure. Not a bad deal for banks considering where Greek bonds trade.

The Greek T-bill was a success, although my understanding is somehow t-bills are treated differently and cannot default under EU law. I'm not sure exactly how that works, or if it has been tested, but the T-bills do not get rated by any of the rating agencies, unlike their normal debt which is Ca/CC. The 13 week yield of 4.5% is very expensive relative to actualy 3 month Greek paper which trades around 87 to yield 65%. So whatever the beneficial of status of t-bills is, it has a huge impact on their yield, but also means they cannot be looked at as much of a sign of Greece's health. Today's auction is useful but they have 2 billion coming due on Friday. Since 4.5% seems very good for Greece, I'm not sure why they don't issue more T-bills, but I assume there is some restriction on that in the law.

http://www.zerohedge.com/news/imminent- ... ek-t-bills

IMF Cuts Global Growth Outlook, Says Europe May Worsen Outlook

Submitted by Tyler Durden
09/20/2011 09:06 -0400
Comments: 45 / Reads: 2,427

Flurry of headlines following an unscheduled IMF release:

~ IMF CUTS GLOBAL GROWTH ESTIMATE, SAYS EUROPE MAY WORSEN OUTLOOK
~ IMF SAYS DOWNSIDE RISKS ARE GROWING
~ IMF SAYS ECB SHOULD CUT INTEREST RATES IF DEBT TENSIONS PERSIST
~ IMF CUTS U.S. 2011 GROWTH ESTIMATE TO 1.5% VS 2.5% SEEN IN JUNE
~ IMF CUTS U.S. 2012 GROWTH ESTIMATE TO 1.8% VS 2.7% SEEN IN JUNE
~ IMF CUTS 2012 EURO-AREA GROWTH PREDICTION TO 1.1% VS 1.7%/JUNE
~ IMF CUTS 2011 WORLD GROWTH FORECAST TO 4% FROM 4.3% IN JUNE
~ IMF CUTS 2012 WORLD GROWTH FORECAST TO 4% FROM 4.5% IN JUNE
~ IMF SAYS ECB MUST KEEP INTERVENING `STRONGLY' IN DEBT MARKETS
~ IMF CUTS SPANISH GROWTH FORECAST FOR 2012 TO 1.1%

Source: BBG

IMF Sept Charts / Data) http://www.scribd.com/doc/65639361/IMF-Sept


http://www.zerohedge.com/news/imf-cuts- ... en-outlook