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Posts tagged ‘Eurobond’

Three reasons I don’t like the idea of the Eurobonds

Wipe our Debt

Wipe our Debt (Photo credit: Images_of_Money)

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Three reasons I don’t like the idea of the Eurobonds:
  1. Issuing Eurobonds to swap for existent Government debt is equivalent to attempting to treat debt overhang by relabeling the debt. While it might reduce the interest burden on the sovereigns suffering from more severe debt overhang, but that is a relatively shallow improvement, especially given that the heavier-indebted sovereigns are already being financed or about to be financed from a collective funding source of ESM.
  2. Issuing Eurobonds to create capacity for new borrowing is equivalent to fighting debt overhang with more debt. In addition to being seriously problematic in terms of logic, there is also a capacity constraint. Eurozone will sport 89.964% debt/GDP ratio this year and under current IMF projections this debt will remain above 90% (+/-1%) bound for 2012-2015. At these levels, debt exerts long term drag on future growth potential for the Euro area as a whole.

full article at source: http://trueeconomics.blogspot.com/

Europe is Out of Time, Breakup Inevitable

One of the many interesting aspects of the Eurozone crisis is how  many key political and central bank leaders fail see (or at least admit)  that Europe is out of time.

Even more peculiar are statements by  ECB president Jean-Claude Trichet who finally does realize time is of  the essence, yet Trichet “solution” is a set of measures that must be  passed by all 17 nations when those nations cannot agree on EFSF  funding, on Eurobonds, on collateral for Greece, or even on whether a  fiscal union or transfer union must take place.

In some instances  the differences boil down to big country vs. small country concerns. In  other instances it is Southern “club-med” states vs. Northern states.  Some countries refuse to give up sovereignty, while others welcome  giving up sovereignty.

It does not help matters when German chancellor Angela Merkel seems to change her mind on something every other week

full article at source:http://www.financialsense.com/contributors/michael-shedlock/2011/09/08/europe-is-out-of-time-breakup-inevitable

Germany wants all of Europe’s Gold

by Tyler Durden

Yesterday we had the Bundesbank making  a very strong case for why a pan-European bailout (funded by Germany), would  need a “fundamental change of regime occurs involving an extensive  surrender of national fiscal sovereignty” (beneficial for Germany),  today we see the next and final stage of the proposed annexation of Europe by
Germany – that which focuses on procuring that which is really important. Hint:
not spam. From  Spiegel: “Minister Ursula von der Leyen pushes the hard line: any financial  aid for euro countries should only come against collateral – as gold
reserves
or industrial holdings.”  More google-translated conditionality: “The CDU politician wants to ensure future aid allocations from  the rescue fund through extensive security of the country.

The ARD Berlin Studios said the minister, who is also vice-chairman of the CDU party,
many of these countries had large reserves of gold and industrial
holdings, which they could use for such collateral.
” And now we know
the next steps: i) Eurobonds will come after there is a change to the European
constitution which make Germany supreme ruler, and ii) at that point Germany
will have all the gold in Europe pledging its bailout. Yes, gold…. not spam

full article at source: http://www.zerohedge.com/news/vice-chairman-germanys-cdu-party-demands-gold-collateral-european-bailout-recipients

 

Is there anybody in Ireland who knows how much gold bulion the irish Centeral bank is holding??

The Euro Dollar Market and Financial Crises

sent in this morning to us  

 Eurodollars are time deposits denominated in U.S. dollars at banks outside the United States, and thus are not under the jurisdiction of the Federal Reserve. Consequently, such deposits are subject to much less regulation than similar deposits within the U.S., allowing for higher margins. The term was originally coined for U.S. dollars in European banks, but it expanded over the years to its present definition: a U.S. dollar-denominated deposit in Tokyo or Beijing would be likewise deemed a Eurodollar deposit. There is no connection with the euro currency or the euro zone. The first Eurodollars were created by deposits made by the Moscow Narodny bank in 1957 to its branch in London to protect Russian State foreign reserves during the cold war.

Eurodollar deposits are a cheaper source of funds because they are free of reserve requirements and deposit insurance assessments.

Due to the secrecy and light regulation surrounding the Eurodollar market, based in London, an extraordinary situation has unfolded where the Euromarket which has no physical embodiment in an exchange is now the largest source of capital in the world. This state of affairs has developed because dollars held in “banks” overseas (i.e. Eurodollars) form the basis of new bank credit. This credit is issued with untold leverage due to no formal reserve requirement and little or no regulation. The fact that this “market” is based at the Corporation of London (otherwise known as “The City”) is one reason why this financial powerhouse is beginning to eclipse New York as the financial center for the 21st. century.

The growth of the Eurodollar market has been further supported by the birth of Eurobonds. These instruments are in the main unregulated offshore bearer bonds. No record is kept of who owns them so they are perfect for tax evasion. Thus it is no shock to discover a great source of funds to the Eurobond market comes from The Isle of Man, Jersey, Guernsey, Malta, Cyprus, The Cayman Islands, Barbados, Bermuda, The Virgin Islands, Gibraltar, Monte Carlo, Lichtenstein, Luxembourg,  the IFSC Dublin, Hong Kong, Panama and of course, the daddy of them all, Switzerland. These tax havens are all linked to “The City” by a myriad of interconnected accountants, lawyers, financial advisors, consultants and “boutique” banks where secrecy is paramount. It is estimated that wealthy individuals and multinational corporations hold more than 18 trillion dollars (that’s trillion with a capital “T”) “offshore” in these “tax havens”.

 As a result the Eurodollar has become a new form of money (if by money one means unregulated credit) and had exploded in size. By 1997 nearly 90% of all international loans were in this market. Today it has grown so large that the Bank of International Settlements has ceased to measure it independently.

The part the Eurodollar market has played in the Global financial collapse has not been fully analyzed or documented to date. I think such an analysis is long overdue. Our monetary system needs to be brought back to a solid steady state where economic value means solid capital investment which creates real added value, real employment and real benefits for ordinary citizens and society  not smoke and mirror transfer profits for a gilded elite.

 Reference:       “Treasure Islands”

                 Nicholas Shaxso Wikipedia Online Encyclopedia

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