While the US continues to bumble its way towards a debt ceiling crisis (somehow our President doesn’t have time to meet work on solving this, but does have time to make sandwiches with volunteers and give press statements about how we wants to work), Europe continues to make us look good by comparison. Remember how we were told time and again that Europe was saved? Remember how repeatedly we were told that the European Central Bank (ECB) would do “whatever it takes” to fix things?
By Joe Gelet:Based on an overwhelming bearish negative bias on the euro (FXE) from multiple sources (individuals, banks, analysts, and fund managers) we believe selling the euro on any run-up is a viable strategy.
As noted on Friday, the Greek soap opera, in which Europe pretends to bail out Greece when it is just bailing out its insolvent banks by not touching the status quo, and Greece pretends to reform and comply with austerity reforms when it merely continues to spend as before until the money runs out and the entire act is repeated, is about to enter its third act.
A divide between the IMF and Europe (read: Germany), regarding writedowns on Greece’s debt to the EU has been brewing for quite some time and recently returned to the international spotlight when, a few months back, the Fund indicated debt relief was a precondition for its participation in any further aid for Athens. More recently, the IMF released a report on Greece’s debt sustainability just prior to the referendum. The timing appeared to be strategic and may have helped secure the "no" vote for Tsipras.
According to IIF director Charles Dallara in a Bloomberg interview, "ECB will be insolvent if Greece were to exit the euro. Europe would have to first and foremost recapitalize its central bank."
Excuse me for asking but how would they attempt to do that? Print Euros?
Please consider Dallara Says Greek Euro Exit May Exceed 1 Trillion Euros
BRUSSELS: Euro zone countries tried in vain to stop the IMF publishing a gloomy analysis of Greece's debt burden which the leftist government says vindicates its call to voters to reject bailout terms, sources familiar with the situation said on Friday. The document released in Washington on Thursday said Greece's public finances will not be sustainable without substantial debt relief, possibly including write-offs by European partners of loans guaranteed by taxpayers. It also said Greece will need at least 50 billion euros in additional aid over the next three years to keep itself afloat.
BERLIN (Reuters) - Cyprus's request for a bailout has created a political headache for German Chancellor Angela Merkel on concerns wealthy Russians could be the chief beneficiaries, the weekly magazine Der Spiegel said on Sunday, citing an intelligence agency report. Cyprus is in talks with international lenders on the terms of a bailout expected to total 10 billion euros after its two largest banks incurred huge losses due to the Greek debt writedown earlier this year. The scale of the aid is tiny compared to Greece and other struggling euro zone countries. ...
Yields on 30-year and 5-year bonds in Spain hit a euro-era record on Friday as the Valencia region of Spain filed for financial assistance.
Bloomberg reports Spain Bonds Slide as Valencia Aid Request Deepens Crisis