This Euro Crisis

From a discussion of the Dutch political system being in the pocket of Big Oil to warning that German policy stipulations and the Euro itself could "potentially destroy the European Union," amid rebellion, George Soros has drastically reduced all Euro-related exposure from his portfolio - only a few weeks after his cautious optimism that Europe is 'revived' in Davos.

Via Pater Tenebrarum of Acting-Man blog, As Der Spiegel reports, capital flight from Southern Europe has stopped and even slightly reversed in recent months. This is a belated reaction – so it is surmised – to the 'OMT' announcement effect.

In a discussion that I had over at ZeroHedge there came the topic of whether bank runs are possible in Europe. Well, I believe we've already had some devastating one's (ex. Northern Rock) but if one takes the continent only or the EZ in particular, we still have a significant systemic threat. The gist behind the argument is that if the true economic capital is weakened to the point that depositors/creditors/counterparties make a run for it, the sovereign nation in which it is domiciled will simply nationalize it. Hmmm...

REGULAR readers know that my view of the likely outcome of the crisis in Europe is a gloomy one. This hasn't changed. Given a number of positive developments in the euro zone—like fairly successful debt auctions for Spain and Italy, and corresponding drops in bond yields—it's worth keeping a close eye on the situation to make sure that something important and positive hasn't actually happened.

By Zvi Bar:At the recent G20 summit held in Cannes, France, the G20’s Financial Stability Board (FSB) released a list of 29 banks deemed so systemically important that they must maintain core tier 1 capital ratios above Basel III requirements.

MARKETS were jolted this morning as rumours spread that Greece had gone to the International Monetary Fund and the European Union to request a debt restructuring. The Greek government has denied that this is so, but restructuring increasingly seems to be a matter of when, not if. Yields on 2-year Greek debt are up 7% and 10-year yields are up over 5%. Both are at crisis highs. There is no question of the Greek government's ability to borrow in private markets any time soon.

This post is a guest contribution by Dian Chu, market analyst, trader and author of the Economic Forecasts and Opinions blog.For the most part of 2010, the typical image of Europe—one of cultural sophistication—has been replaced by widespread riots, burning cars, large scale strikes over labor reform and unemployment resulting from austerity measures amid a sovereign debt crisis in the region.