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  • Well the banker - Government axis is surely founded on the banks lending to Governments. Derevetives are merely how they insure themselves against losses of those loans, and other loans, in theory. Therefore should any loan sector default the derivative holders take the first hit.

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    • Originally posted by snapper View Post
      Well the banker - Government axis is surely founded on the banks lending to Governments. Derevetives are merely how they insure themselves against losses of those loans, and other loans, in theory. Therefore should any loan sector default the derivative holders take the first hit.
      The reality of course is most derivatives aren't backed by cold hard cash, they are backed by more derivatives and imaginary insurance backed by more of imaginary insurance doesn't make you whole when things go boom.
      Originally from Sochi, Russia.

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      • Mish's Global Economic Trend Analysis: European ERM 1992 Replay: Same Problems, Same Issues, Same Countries, Only the Politicians Differ; Irony of the Maastricht Treaty

        good thoughts
        Originally from Sochi, Russia.

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        • Hungary to the IMF: BBC News - Hungary asks for IMF and EU assistance

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          • Bearing in mind yesterdays warning from S&P that ALL Euro nations may face a downgrading in their ratings (see S&P threat of rating cuts may hit eurozone rescue - Telegraph) how come the EFSF is not threatened? Surely if all the guarantors are downgraded the fund itself must be undermined?

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            • Originally posted by snapper View Post
              Bearing in mind yesterdays warning from S&P that ALL Euro nations may face a downgrading in their ratings (see S&P threat of rating cuts may hit eurozone rescue - Telegraph) how come the EFSF is not threatened? Surely if all the guarantors are downgraded the fund itself must be undermined?
              They did threaten to downgrade the EFSF on Tuesday.

              Notably there have some leaked documents out of Europe this week, to test the water before the big summit.

              We are moving into the endgame now and I have to say I am a little confused about the noises coming from Merkosy et al. . There are a number of leaked documents about common tax bases, and a tighter fiscal union etc, but what will these measures achieve in the short term, how will such policies tackle the sovereign debt crisis that could potentially sink the euro in the coming months? I wonder if this is a smoke screen, leaking documents that threaten measures (such as tackling the lower corporation tax in many euro countries, notably Ireland), which numerous governments in Europe will clearly or surely not agree to, so that Merkosy can then offer a token gesture at the summit. Is this a clear goal or is something else at hand behind the scenes?

              The bottom line is iam confused in how the core problem is to be tackled in this summit. Documents leaked indicate that Merkosy want it to be clear that no private investors can be wrote off in future bailouts and that the Greek writeoff of debt (50%) is to be considered as "unique and exceptional", at this thought, as an Irishman, I can only despair. Perhaps, if a breakup ensues and broken rugby is to be played, Merkosy will not be so easily able to dictate such matters, but I shunder to think what may be agreed, purely from the Irish pespective, this weekend. Talks of major treaty change, with referendum dodging is a very tricky business, especially with 10 non euro countries involved. I saw scenes from parliament in Britain yesterday on the news which illustrate the complexity of the situation.

              Frankly I dont know what to make of it all and I am wholly confused on all these matters. One thinktank I read about stated their belief that moves over the xmas, during a lull in the markets, will commence in initiating a greek exit from the eurozone, possibly to be followed by Portugese and Irish exits in the coming 2 years.

              As a sidenote, Iam posting the below, long article on the Irish segment of this diaster for anyone interested. I have been on holiday recently (mostly Italy) and was amazed to find how little was known when I talked, albeit to a small number of people, about Irelands story in the eurozone crisis.
              When Irish Eyes Are Crying | Business | Vanity Fair
              and for anyone considering the irish situation in the mess, I remind them to keep this fact in mind
              In Greece the money was borrowed by the state: the debts are the debts of the Greek people, but the people want no part of them. The Greeks already have taken to the streets, violently.... In Ireland the money was borrowed by a few banks, and yet the people seem not only willing to repay it but to do so without a peep of protest.
              Last edited by tantalus; 08 Dec 11,, 13:52.

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              • Are they getting out now? Sincerely hope so.

                Fitch agency lifts Greek government rating by 1 notch to B- _ still deep in junk territory - The Washington Post
                No such thing as a good tax - Churchill

                To make mistakes is human. To blame someone else for your mistake, is strategic.

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