Discussion in 'Forex' started by syswizard, Sep 4, 2011.
Rationale: Spain and Italy going "Greek"; US economy improves.
either that or to make it easier to issue 1 world currency.
it will never happen............
big government will never give up currency leverage to move their economy.
the weak joined into the euro with two big guns.
they now realize the error of their ways.
germany will exit the euro in 2012 and then we can all trade the d mark
one more time.
I'm very pessimistic about the euro but I cant see optimism on the usd to bet on parity.
Believe it or not, much will happen overseas during this month to determine this...
strap in and put some velcro on your ass as a backup.
the funny mentals really do not matter.
grab a chunk daily and let the suits and talking heads talk trash as you bag up the dough.
read page 34 of this thread.
bank traders / market makers do not give a rip about the news........
Interesting, thx for sharing
That post was TOTALLY IRRELEVANT....I saw a chart on GOOG.
Forex markets align with the economic and interest rate fundies I'm afraid.
I did enjoy the one chart with all of the fib lines on it...it was classic "draw enough lines on a chart and the market is bound to hit one"....
i luv to trade against you guys......
alignment is for the 430's front end.
let me call the floor, i will get the yen aligned to a zero interest rate that has been in place for the last 10 years.
then you trade everything else off it and prove your theory.
The best scenario would be for Greece and Portugal to leave the EU first and see if the rest can carry the euro thru...but about half of the economists out there think the the whole EU will implode within 3 yrs.....we'll see I guess
The huge fall in European bank stocks during August is only a taste of what these future funding problems are going to look like.
Europe's banks were forced to accept losses of at least 21% on their Greek bonds, which were actually trading down about 50%.
Royal Bank of Scotland's accountants decided to actually mark their bonds to the market and took a $1.2 billion loss.
The stock collapsed as a result â falling like a stone from the mid-$10s to less than $8.
There are two key points to understand.
First, most of Europe's banks didn't mark their Greek debt to the actual market price.
They only took 21% losses.
France's BNP and Belgium's Dexia "only" lost 534 million euros and 338 million euros, respectively.
That's less than RBS lost, even though both BNP and Dexia own far more Greek debt.
Most of Europe's banks took this 21% accounting compromise (Societe Generale, Deutsche Bank, and UniCredit) even though Greece will likely default at some point and even though the bonds are trading for much less than the 21%-loss level implies.
That means sooner or later, these banks are going to have to take additional losses on these assets, probably more than double the losses they've already taken.
That alone would make some of them insolvent. Likewise, almost all of the Greek banks would be left insolvent by a 50% decline in the value of Greece's government bonds.
The second key point to understand is... ....
a Greek default would almost surely trigger defaults in Ireland's, Portugal's, and Italy's bonds...
and a downgrade of France's sovereign debt...
as investors would flee these markets as sovereign borrowers attempted to prop up the banking system.
The only solution is a massive bailout of Europe's banks. According to a recent study from consulting firm McKinsey & Co.,
Europe's banks will require $3.5 trillion to $5 trillion in additional capital in order to meet the new Basel III global banking requirements.
And that doesn't take into account the current fragility of Europe's bank financing arrangements.
Roughly 50% of European bank assets are financed using funds borrowed from the U.S. money market.
The only large sovereign lender with any real credit remaining is Germany, which for political reasons may be unwilling to bail out the entire European banking sector...
and even if it wanted to do so, the magnitude of the capital that's needed would push Germany's sovereign debt total to more than 200% of GDP.
It is very unlikely Germany will accept this obligation under any circumstance.
Germany and two or three other northern European countries might decide to simply leave the euro altogether and use a reconstituted German mark as their currency.
The remaining euro countries would then recapitalize their banking systems through inflation and a massive devaluation of the euro, which would no longer be a reserve currency.
got all that......?
looking forward to trading the Dmark once again.
square corners and uber sleds.
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