Deutsche Bank Charts a Danger Map For A Crisis Prone And Credit Troubled World

Against a background of 30%-plus falls in bank share prices around the world and growing fears of a severe blow to the European bank sector in the event of a sovereign debt default, Deutsche Bank has produced a lengthy tome that answers 'everything you wanted to know about the global banking sector but were afraid to ask'. A compendium of charts and tables, summarized effectively by 'Danger Maps' designed to highlight countries which face greater (or lesser) stresses for their banking systems is further extended into a country-by-country breakdown for developed and emerging markets. While their findings may not line up perfectly with our more global contagion perspective, they do create a systematic framework for judging relative investment opportunities that sees Japan, Australia, Hong Kong, and the Nordics as the least risky; US and UK about average on macro scores; while unsurprisingly (with the exception of Germany) the Eurozone countries have the highest danger scores. Transmission channels are discussed and they make a critical point on bank valuations that earnings estimates are extremely sensitive now to bad debt charges and credit quality assumptions. We then point out their more trading-focused (and negative stance) on European banks citing long-term funding, short-term liquidity, and capitalization as enormous systemic hurdles to anything other than short-term compressions.

 

 

Banks Prepare for Greek Default, Want EU Help

Bankers are bracing for a Greek default, and their best hope is that Europe can erect  firewalls around the banking system strong enough and soon enough to prevent it from spreading to other euro-zone countries.

 

 

Bank of America is Becoming a "Counterparty Risk" Like Bear and Lehman

 

 

Where is Mexico's gold, and is it really gold at all?

 

 

Banks downgraded, but is too-big-to-fail really over? 

 

 

Israel Has Dumped 46 Percent of Its U.S. Treasury Bills; Russia 95 Percent

 

 

Bernanke Triggers October Crash Early

 

 

Central banks are intervening in currency markets all over the place

Gold probably as well, but the Financial Times could never, ever ask about that.

* * *
Emerging Markets Try to Steady Currencies
By Stefan Wagstyl
Financial Times, London
Sunday, September 25, 2011
http://www.ft.com/intl/cms/s/0/91057f04-e609-11e0-960c-00144feabdc0.html

 

 

Avoid counterparty risk as financial system topples, Turk tells King World News

 

 

S&P Reminds Europe Of Its Toxic Catch 22, Warns EFSF Expansion Will Lead To More Sovereign Downgrades, Rendering EFSF Itself Useless

Finally, little by little, the fog of toddler-like euphoria over any and every most recent European bailout plan is starting to lift, this time with the S&P finally speaking up and reminding everyone of what they already know: namely that an expansion of that now-daily deux ex machina, the EFSF, will "potentially trigger credit rating downgrades in the region, a top Standard & Poor's official warned. David Beers, the head of S&P's sovereign rating group, said it is still too soon to know how European policymakers will boost the European Financial Stability Facility, how effective that will be and its possible credit implications....But he said the various alternatives could have "potential credit implications in different ways," including for leading euro zone countries such as France and Germany." Get that? As Zero Hedge said back on July 21, the European bailout Catch 22 is now once again front and center, namely that any expansion in the EFSF will lead to a downgrade in one of the two Eurocore countries, France or Germany, and should France get cut from AAA (which it will), the entire burden of footing the European bailout bill will fall on Germany. And if Germany is also downgraded to AA, kiss your SPV CDO goodbye, and with it Europe. Which means that while we will hear many more threats by both and against S&P, more posturing that the EFSF will be enhanced to tens if not hundreds of trillions with virtually unlimited leverage, however idiotic those may be, the end result is just one: whether or not Germany risks a full blown government collapse by instituting the only thing that has a chance of containing the crisis - EuroBonds. Of course, shoul those come to be, the German Pirate party will very soon have an absolute majority in the German parliament... and shortly thereafter in various previously unheard of beer halls.

Hugh Hendry Makes Rare Media Appearance, Discusses Greece And Other Cheap Folding Suits

The man who singlehandedly took "I would recommend you panic" and made it into one of the catch phrases of the year (if not decade), and who has recently been in a self-imposed media blackout, had a rare media appearance when late last week he appeared on the BBC show The Bottom Line Evan together with Guy Berruyer, chief executive of global business software supplier Sage Group; and internet entrepreneur Brent Hoberman, founder of online interior decoration business mydeco.com. Obviously we were mostly interested in what Hugh would say, and luckily he did say quite a lot, if nothing too shocking for those familiar with his generally cheery outlook on the world.  Among the snazzy soundbites was his explanation that the UK is not in a recession, but a depression, something Zero Hedge has been saying about the entire, never mind England, for the past 2.5 years, and the proceeds to give the rational breakdown of the Greek situation, which as everyone knows is that it is purely due to political power grabbing and banker greed and financial innovation allowing the masking of reality. As for the outcome, we all know it: Greece defaults, creditors take major haircuts, speculators get blamed, etc.

 

 

Berlusconi Main Squeeze Merkel Sends Mixed Messages: Says Eurozone Insolvency Is Possible But Greek Default Would Be Comparable To Lehman

In a surprisingly candid yet traditionally schziophrenic interview on ARD 1 show GuntherJauch, Angela Merkel once again sent the same mixed messages that have forced Berlusconi to smile to her face while saying less than flattering things, ahem, behind (no punt intended) her. While on one hand she said that default is an option under the post-2013 Euro rescue fund and emphasized that a euro-area sovereign insolvency can not be ruled out, she also made it clear that Europe continues to have no Plan B. According to Reuters, "allowing Greece to default on its debt now would destroy investor confidence in the euro zone and might spark contagion like that experienced after the bankruptcy of Lehman Brothers in 2008, German Chancellor Angela Merkel said on Sunday." Obviously this is not new, and our humble interpretation is to continue to telegraph to the market how unstable the Eurozone is so there are very little expectations and more EUR short squeezes can be accomplished, as well as not pricing in anticipation that emergency liquidity conduits, currently being implemented, actually succeed in case they actually do. Of course, should Europe really succeed in ejecting Greece without Europe imploding which is the interim end game here that would certainly send the EURUSD to well over 1.50. Alas, we put chances of that happening at about 1%.

 

 

Swiss stock exchange will let traders settle in gold

 

 

Gold's fall attributed to Fed's unexpected restraint with bonds, and to intervention

 

 

EURUSD Quick Recovery From Opening Gap Down Even Though China Refutes Again It Will Bail Out Europe

EURUSD opened down 80pips, to below Friday's lows, but has somewhat rapidly recovered those losses shifting into the green now in very early (and thin) trading. We assume this means the market has still not processed the latest news from China, which officially refutes, for the third time, rumors of an imminent Chinese bailout. From Bloomberg: "It’s “too early” to determine how emerging economies can further help the euro area overcome its sovereign debt crisis because reforms are still under way, China’s Central Bank Governor Zhou Xiaochuan said. “We need to first see if euro-zone countries can implement their July 21 decision,” Zhou told reporters at the International Monetary Fund in Washington on Sept. 24, referring to a pledge by European leaders to expand the powers of a regional rescue fund. He doesn’t expect Greece will default on its debt and anticipates Europe will be able to overcome its crisis through reform, he told reporters." So, first the bank recap rumor refuted, and now the China bailout one... Perfect: it means that the upcoming week will see brand "new" rumors talking about... bank recaps and a Chinese bailout of Europe.

 

 

Bank of Canada's Carney (no pun intended) says PRINT! PRINT! PRINT!

silvergoldsilver at silvergoldsilver - 1 minute ago

Why are you so nervous Marc? You and your butt buddy Flaherty say everything is A-okay in Canada no matter what happens... "Canada, along with the U.S. and some other non-eurozone countries, applied pressure on European leaders to commit to an expanded emergency fund that would convince jittery markets they were serious about dealing with their sovereign debt problems and protecting exposed banks. Carney made news by suggesting the fund should be *pumped up* "in the neighbourhood" of *one trillion euros*, more than twice the current commitment." Things must be A-okay. Click here to... more » 

Negative feedback loop...paging Blythe... unintended consequeces of operation smash taking effect....paging Blythe...

silvergoldsilver at silvergoldsilver - 1 hour ago

From Wiki: "Negative feedback occurs when the output of a system acts to oppose changes to the input of the system, with the result that the changes are attenuated. If the overall feedback of the system is negative, then the system will tend to be stable" Greetings from the Inglewood California Silver line on Friday. LOL. Inglewood! Where u at? LOL...2 hour Wait time. Please start sending in your silver line photos. This is supposed to be happening when Silver is at $500 not $30 and down 27% in 2 days. Paging Blythe!