Events are over-taking me as well.
This morning, the explosion of CDS costs moved from Greece, whose costs are already orbiting the planet anyway, to Spain, Italy and Hungary. Does that trio sound familiar? Why have debt insurance costs shot up? Because the 750 Billion Euro ‘shock and awe’ action hasn’t worked and won’t. Spain is in full crisis now. Hungary is thinking of banning Foreign Exchange trading including mortgages taken in Swiss francs. This is known to be illegal but Hungary is going to try it anyway. Such is their plight.
Also today, this morning in fact, the EU was forced, and forced is the correct word, to extend for 6 more months special bank guarentee funds that were due to expire this week, for Ireland Spain and Denmark. They will add to the costs of Bank Guarantees already extended for Sweden, Latvia, Austria and even for some banks in Germany. And the EU is ‘considering’ extensions for Netherlands, Poland and Slovenia, and for Greece and Polnad a guarentee and a recapitalization fund. Oh and I nearly forgot – Hungary – where we started, Hungary has a ‘liquidity’ scheme to stop its banks from closing in the morning.
Don’t let any of this influence you into thinking there is anything wrong. There isn’t. At all. Anywhere. So could eveyone please stop staring and move along. You’re making us nervious.
And as if to prove this Germany has released results of its stress tests and NOTHING is wrong with Deutsche, or Commerz or indeed with Beyern LB. That would be the Landesbank which has Lots and lots and lots of laons out with cutomers in….er, …Hungary – well, would you look at that!
Meanwhile back in Spain Santander and BBVA are both traading down 5%. Ouch. And those are the ONLY two possibly solvent banks in Spain. So why would they be down? Behind all the figures and percents one fact remains. There has been for nearly two omnths now, and it appears to be accelerating, a flow of money OUT of all European banks and INTO Swiss ones. Hnece the Swiss Franc’s unstopable rise in value, despite desperate interventions by everyone. It used to be called a bank run. Today we would call it the free flow of capital! Whatever you call it – how much liquidity, guarenteeing, recapitalizing and general bailing-out can the EU and the ECB do before the Euro starts to come apart?