Banks brace for eurozone defection


UPI.com
Nov. 26, 2011

BRUSSELS, Nov. 26 (UPI) — Banks in Europe say they are bracing themselves against the eurozone possibly losing one more member because of the ongoing sovereign debt crisis.

“We cannot be, and are not, complacent on this front. We must not ignore the prospect of a disorderly departure of some countries from the eurozone,” said Andrew Bailey, a regulator at Britain’s Financial Services Authority, The New York Times reported Saturday.

Analysts in a research note at Nomura bank said, “The eurozone financial crisis has entered a far more dangerous phase — a euro(zone) breakup now appears probable, rather than possible.”

Banks in Europe and the United States have been divesting their portfolios of tens of billions of dollars worth of European government bonds to minimize losses if one or more countries break away from the eurozone.

While that protects them from losses, it also pushes the eurozone deeper into crisis, as government borrowing becomes more expensive.

There are 17 countries that share the euro as currency, which has created an enormous economic block that helps stabilize ups and downs in the marketplace.

The eurozone is listing, as Greece, Ireland and Portugal have required international loans to keep from going into default. Spain and Italy, with far lager economies, have fiscal problems that also put the euro in jeopardy.

However, there is no Plan B — rules that would make it possible for a faltering country to exit the eurozone and adopt a native currency in an orderly fashion.

An impasse threatens the credit rating of eurozone stalwarts such as France and Germany.

Standard & Poor’s Friday downgraded Belgium’s credit rating from AA+ to AA, indicating its debt problems were not short term. Earlier in the week, credit ratings of Portugal and Hungary were reduced to junk status.

While pressure mounts for Europe to find a solution to the debt crisis, Germany remains consistent with the message the eurozone should hold together. Banks, however, are considering other possibilities, the Times said.

Print Friendly

  1. #1 by k1980 on Sunday, 27 November 2011 - 3:35 pm

    Has the credit ratings of the mamak-owned National Feedlot Centre been reduced to junk status yet?

  2. #2 by waterfrontcoolie on Sunday, 27 November 2011 - 4:06 pm

    We have the BRIC and now CIVETS and I am wondering if our original status as one of the FLYING Tigers still has any meaning? At this juncture; flying is definitely out, though I am if we are able to walk let alone run with the original tigers?

  3. #3 by monsterball on Sunday, 27 November 2011 - 6:13 pm

    Suddenly….properties have gone down by 25% to 35%.
    Pity those who need to sell.
    Others who can hold on to their properties may need to tightened their belts…to balance monthly budget….again and again.
    Naturally…the government will say…this is natural…….cannot be avoided.

  4. #4 by monsterball on Sunday, 27 November 2011 - 6:17 pm

    All you need is to change the government and see the difference.
    Only idiots want same parties to keep on governing their lives.
    From bullock carts time..to space age…..no change.
    But they are not idiots at all.
    What are they….cows…robots?

  5. #5 by limkamput on Sunday, 27 November 2011 - 7:21 pm

    This is the high income model we try to imitate; you know getting rich and have high standard of living without working for it. The alternative name is free lunch economics. It is time the whole world wake up to look at the way national governments everywhere manage their economies, how they think they can spend and spend, how the moronic rating agencies go about rating sovereign bonds, and how the stupid bond investors and arrangers think they can have high returns with secured risk. Sure, we have renowned economists everywhere but the modus operandi is the same – create money, borrow and spend, enjoy good living without working for it. Even individuals and households are not imitating their national governments, borrow and spend in the name of generating domestic demands to sustain the moronic economic growth.

You must be logged in to post a comment.