Big depositors in the Bank of Cyprus could lose about 60 percent of savings of more than 100,000 euros ($128,000), the island's central bank has confirmed.
The official decree published on Saturday said that the bank would give depositors shares worth 37.5 percent of savings of more than 100,000 euros.
Banking and finance ministry officials say that a further 22.5 percent will be held until authorities know they can satisfy the terms of the bailout.
Under the first eurozone rescue package to punish savers, Cyprus can only qualify for the 10bn-euro ($13bn) loan by finding 5.8bn euros ($7bn) of its own.
"There will be a 37.5 percent "haircut" on deposits over 100,000 euros that will be converted into shares," Marios Mavrides, a politician from the conservative political party of President Nicos Anastasiades, announced.
"Then 22.5 percent will be held from the account for about two or three months, but this sum might be lower if a bigger haircut is needed."
The remaining 40 percent would be held for six months to prevent the east Mediterranean island's banks being drained.
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
The biggest financial crime in all of history was basically dismissed yesterday. The case proving with a mountain of evidence that all financial institutions are working with each other in order to manipulate the market of currencies around the world at the cost of masses of humans' well-being in the name of profit was mostly dropped.
This mostly involved European credit agencies in charge of the interest rates and EU/American big banks coordinating their efforts to make the most interest from their loans.
*Note* The amount in question in this case involved more than 70% of the entire world's capital combined on paper documented throughout the last 100+ years funding both sides of virtually every war including both World Wars and all the workings of funds behind the Communist vs Capitalism movement as well as every political movement since.
On March 31 2013 22:38 sCCrooked wrote: The biggest financial crime in all of history was basically dismissed yesterday. The case proving with a mountain of evidence that all financial institutions are working with each other in order to manipulate the market of currencies around the world at the cost of masses of humans' well-being in the name of profit was mostly dropped.
This mostly involved European credit agencies in charge of the interest rates and EU/American big banks coordinating their efforts to make the most interest from their loans.
On March 31 2013 22:38 sCCrooked wrote: The biggest financial crime in all of history was basically dismissed yesterday. The case proving with a mountain of evidence that all financial institutions are working with each other in order to manipulate the market of currencies around the world at the cost of masses of humans' well-being in the name of profit was mostly dropped.
This mostly involved European credit agencies in charge of the interest rates and EU/American big banks coordinating their efforts to make the most interest from their loans.
*Note* The amount in question in this case involved more than 70% of the entire world's capital combined on paper documented throughout the last 100+ years funding both sides of virtually every war including both World Wars and all the workings of funds behind the Communist vs Capitalism movement as well as every political movement since.
I can see why this one is problematic for the judge to let procede. Secondary liability is abusable in cases where the praxis is questionable to some degree rather than an ill-fated grift.
However, the UK governments settlements are extremely laughable. With only financial slaps to the banks they can laugh it off and intensify the profitable businesses associated with setting the interest rates... There needs to be costs for the officers and the boards for this to change and that is not something we see in the horizon! We may see more oversight, but learn the rules so you can break them is the name of the game in these markets. Bear in mind that UK is only a single market. There are several others with similar kinds of intestest rate setting.
A company owned by in-laws of Cypriot President Nicos Anastasiades withdrew dozens of millions from Laiki Bank on March 12 and 13, according to an article published in Cypriot newspaper Haravgi.
The newspaper, which is affiliated to the communist-rooted AKEL party, reports that three days before the Eurogroup meeting the company took five promissory notes worth €21m from Laiki Bank and transferred the money to London.
Responding to the allegations, Anastasiades said: “The attempt to defame companies or people linked to my family… is nothing but an attempt to distract people from the liability of those who led the country to a state of bankruptcy.”
The president added that no one, including himself, will be exempt from the ongoing investigations looking into responsibilities over the near collapse of the economy.
Anastasiades added that when the investigative committee convenes on Tuesday, he will request that its members look into this particular case with the same attentiveness as all other cases.
The list is out now. It's just a photocopy from what I'm seeing (for now).
But if Andrei Akimov got his money out before the freeze, 2 million EU... (CEO of Gazprom) then all the other Russians did too. He's the last name on the 2nd sheet within the link.
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
Thank you. After reading the Bloomberg article, here is what I understand :
The Dutch banks have high quality loans (Because, historically, the Dutch repay their debt and are near 0 default. So they are really good quality assets). But, because of the Basel III rules, those cannot be used to fulfill the new liquidity obligations.
At the same time, worst assets (including spanish loans that have a way higher default rate) can be used.
It is important to understand that the Dutch banks don't have "a hole" of 270 billions. They have those 270 billions in high quality assets (mortgage backed securities from some of the best loans of the planet). But they cannot use it to fulfill their new european obligations because those loans were given at 95% the value of the home (Basell III rules accept only loans up to 80% the value of the home to count toward the new liquidity obligation).
It is problematic of course, but not as problematic as if they actually had to find 270 billions out of nothing. Because, even if they cannot use those loans for the new liquidity rules, the loans are still there. They still possess them.
Possible solutions :
1) They ask for a change in Basel III rules, because that part of the rules is stupid. Seriously, accounting risky spanish loans while refusing ultra secured dutch loans... wtf.
2) They sell those mortgage backed securities (possibly at a discount) to some private investors. In that case, they will have to come with the rest of the money (the discount). But it will never be 270 billions, it will be far less. And there will be buyers because those are high quality assets. The real problem being that no european banks can buy it, since it is not taken into account for Basel III (so they will have to sell at a discount to private investors).
TL;DR : yeah it is stupid and problematic but not as problematic as a 270 billion deficit. The actual amount missing is just the discount they will have to accept (probably a small % of the total 270 billion).
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
Thank you. After reading the Bloomberg article, here is what I understand :
The Dutch banks have high quality loans (Because, historically, the Dutch repay their debt and are near 0 default. So they are really good quality assets). But, because of the Basel III rules, those cannot be used to fulfill the new liquidity obligations.
At the same time, worst assets (including spanish loans that have a way higher default rate) can be used.
It is important to understand that the Dutch banks don't have "a hole" of 270 billions. They have those 270 billions in high quality assets (mortgage backed securities from some of the best loans of the planet). But they cannot use it to fulfill their new european obligations because those loans were given at 95% the value of the home (Basell III rules accept only loans up to 80% the value of the home to count toward the new liquidity obligation).
It is problematic of course, but not as problematic as if they actually had to find 270 billions out of nothing. Because, even if they cannot use those loans for the new liquidity rules, the loans are still there. They still possess them.
Possible solutions :
1) They ask for a change in Basel III rules, because that part of the rules is stupid. Seriously, accounting risky spanish loans while refusing ultra secured dutch loans... wtf.
2) They sell those mortgage backed securities (possibly at a discount) to some private investors. In that case, they will have to come with the rest of the money (the discount). But it will never be 270 billions, it will be far less. And there will be buyers because those are high quality assets. The real problem being that no european banks can buy it, since it is not taken into account for Basel III (so they will have to sell at a discount to private investors).
TL;DR : yeah it is stupid and problematic but not as problematic as a 270 billion deficit. The actual amount missing is just the discount they will have to accept (probably a small % of the total 270 billion).
I don't envy the regulator's job here. On one hand Dutch mortgages have been super-safe historically. On the other hand the market is looking a bit wonky (lots of underwater mortgages and growing fast - source or source). The Dutch market also seems unique to the rest of Europe, which makes common standards all the harder.
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
Thank you. After reading the Bloomberg article, here is what I understand :
The Dutch banks have high quality loans (Because, historically, the Dutch repay their debt and are near 0 default. So they are really good quality assets). But, because of the Basel III rules, those cannot be used to fulfill the new liquidity obligations.
At the same time, worst assets (including spanish loans that have a way higher default rate) can be used.
It is important to understand that the Dutch banks don't have "a hole" of 270 billions. They have those 270 billions in high quality assets (mortgage backed securities from some of the best loans of the planet). But they cannot use it to fulfill their new european obligations because those loans were given at 95% the value of the home (Basell III rules accept only loans up to 80% the value of the home to count toward the new liquidity obligation).
It is problematic of course, but not as problematic as if they actually had to find 270 billions out of nothing. Because, even if they cannot use those loans for the new liquidity rules, the loans are still there. They still possess them.
Possible solutions :
1) They ask for a change in Basel III rules, because that part of the rules is stupid. Seriously, accounting risky spanish loans while refusing ultra secured dutch loans... wtf.
2) They sell those mortgage backed securities (possibly at a discount) to some private investors. In that case, they will have to come with the rest of the money (the discount). But it will never be 270 billions, it will be far less. And there will be buyers because those are high quality assets. The real problem being that no european banks can buy it, since it is not taken into account for Basel III (so they will have to sell at a discount to private investors).
TL;DR : yeah it is stupid and problematic but not as problematic as a 270 billion deficit. The actual amount missing is just the discount they will have to accept (probably a small % of the total 270 billion).
I don't envy the regulator's job here. On one hand Dutch mortgages have been super-safe historically. On the other hand the market is looking a bit wonky (lots of underwater mortgages and growing fast - source or source). The Dutch market also seems unique to the rest of Europe, which makes common standards all the harder.
I think it's a good thing. Lots of countries and banks were in good shape and had good ratings before 2008, but then collapsed anyways. External forces play a role in this kind of stuff, and being so heavily invested in property can turn out very badly. Plummeting land value, rising unemployment, and falling wages can quickly turn a low default rate into a high one, and Dutch banks are at risk.
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
Thank you. After reading the Bloomberg article, here is what I understand :
The Dutch banks have high quality loans (Because, historically, the Dutch repay their debt and are near 0 default. So they are really good quality assets). But, because of the Basel III rules, those cannot be used to fulfill the new liquidity obligations.
At the same time, worst assets (including spanish loans that have a way higher default rate) can be used.
It is important to understand that the Dutch banks don't have "a hole" of 270 billions. They have those 270 billions in high quality assets (mortgage backed securities from some of the best loans of the planet). But they cannot use it to fulfill their new european obligations because those loans were given at 95% the value of the home (Basell III rules accept only loans up to 80% the value of the home to count toward the new liquidity obligation).
It is problematic of course, but not as problematic as if they actually had to find 270 billions out of nothing. Because, even if they cannot use those loans for the new liquidity rules, the loans are still there. They still possess them.
Possible solutions :
1) They ask for a change in Basel III rules, because that part of the rules is stupid. Seriously, accounting risky spanish loans while refusing ultra secured dutch loans... wtf.
2) They sell those mortgage backed securities (possibly at a discount) to some private investors. In that case, they will have to come with the rest of the money (the discount). But it will never be 270 billions, it will be far less. And there will be buyers because those are high quality assets. The real problem being that no european banks can buy it, since it is not taken into account for Basel III (so they will have to sell at a discount to private investors).
TL;DR : yeah it is stupid and problematic but not as problematic as a 270 billion deficit. The actual amount missing is just the discount they will have to accept (probably a small % of the total 270 billion).
I think the main issue facing the Dutch banks right now is that the Dutch property bubble is on the verge of exploding. I found a nice article that explains it better than I ever could
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
Thank you. After reading the Bloomberg article, here is what I understand :
The Dutch banks have high quality loans (Because, historically, the Dutch repay their debt and are near 0 default. So they are really good quality assets). But, because of the Basel III rules, those cannot be used to fulfill the new liquidity obligations.
At the same time, worst assets (including spanish loans that have a way higher default rate) can be used.
It is important to understand that the Dutch banks don't have "a hole" of 270 billions. They have those 270 billions in high quality assets (mortgage backed securities from some of the best loans of the planet). But they cannot use it to fulfill their new european obligations because those loans were given at 95% the value of the home (Basell III rules accept only loans up to 80% the value of the home to count toward the new liquidity obligation).
It is problematic of course, but not as problematic as if they actually had to find 270 billions out of nothing. Because, even if they cannot use those loans for the new liquidity rules, the loans are still there. They still possess them.
Possible solutions :
1) They ask for a change in Basel III rules, because that part of the rules is stupid. Seriously, accounting risky spanish loans while refusing ultra secured dutch loans... wtf.
2) They sell those mortgage backed securities (possibly at a discount) to some private investors. In that case, they will have to come with the rest of the money (the discount). But it will never be 270 billions, it will be far less. And there will be buyers because those are high quality assets. The real problem being that no european banks can buy it, since it is not taken into account for Basel III (so they will have to sell at a discount to private investors).
TL;DR : yeah it is stupid and problematic but not as problematic as a 270 billion deficit. The actual amount missing is just the discount they will have to accept (probably a small % of the total 270 billion).
I think the main issue facing the Dutch banks right now is that the Dutch property bubble is on the verge of exploding. I found a nice article that explains it better than I ever could
A big part of it is also because the laws surrounding mortgages have been changed 3 times in a year which caused a lot of confusion on the market and a lot f people obv won't buy a house when they don't know what the politicians will decide in 3 months time concerning the biggest financial transaction in your life.
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
Thank you. After reading the Bloomberg article, here is what I understand :
The Dutch banks have high quality loans (Because, historically, the Dutch repay their debt and are near 0 default. So they are really good quality assets). But, because of the Basel III rules, those cannot be used to fulfill the new liquidity obligations.
At the same time, worst assets (including spanish loans that have a way higher default rate) can be used.
It is important to understand that the Dutch banks don't have "a hole" of 270 billions. They have those 270 billions in high quality assets (mortgage backed securities from some of the best loans of the planet). But they cannot use it to fulfill their new european obligations because those loans were given at 95% the value of the home (Basell III rules accept only loans up to 80% the value of the home to count toward the new liquidity obligation).
It is problematic of course, but not as problematic as if they actually had to find 270 billions out of nothing. Because, even if they cannot use those loans for the new liquidity rules, the loans are still there. They still possess them.
Possible solutions :
1) They ask for a change in Basel III rules, because that part of the rules is stupid. Seriously, accounting risky spanish loans while refusing ultra secured dutch loans... wtf.
2) They sell those mortgage backed securities (possibly at a discount) to some private investors. In that case, they will have to come with the rest of the money (the discount). But it will never be 270 billions, it will be far less. And there will be buyers because those are high quality assets. The real problem being that no european banks can buy it, since it is not taken into account for Basel III (so they will have to sell at a discount to private investors).
TL;DR : yeah it is stupid and problematic but not as problematic as a 270 billion deficit. The actual amount missing is just the discount they will have to accept (probably a small % of the total 270 billion).
I think the main issue facing the Dutch banks right now is that the Dutch property bubble is on the verge of exploding. I found a nice article that explains it better than I ever could
A big part of it is also because the laws surrounding mortgages have been changed 3 times in a year which caused a lot of confusion on the market and a lot f people obv won't buy a house when they don't know what the politicians will decide in 3 months time concerning the biggest financial transaction in your life.
People want me to believe that businesses and governments "learn from the past" and don't need to be regulated, but then we have people like you. Banks lend out too much while consumers borrow too much, but that's apparently not the problem. "Burdensome government, that's the reason why people are underwater on their mortgages now! We've seen this play a dozen times now, but the causes of Dutch woes are different than those lazy people in Spain!"
Unemployment rose to a record high of 12 percent in February in the Eurozone, according to the latest data released by the EU's official statistics agency.
The Belgium-based Eurostat said on Tuesday that some 19.07 million people in the 17-member currency bloc are looking for jobs, up by 1.01 percent from the same month last year.
"Such unacceptably high levels of unemployment are a tragedy for Europe,"said a spokeswoman for EU Employment Commissioner Laszlo Andor. "The EU has to mobilise all available resources to create jobs...young people in particular need help," she said.
The figures and a weak manufacturing sector report added to the gloom after data earlier this year had encouraged some hope the European economy might finally have touched bottom.
Analysts suggested Tuesday's reports pointed instead to worse to come, with the jobless queues likely to grow as the debt crisis continues to sap the economy.
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
Thank you. After reading the Bloomberg article, here is what I understand :
The Dutch banks have high quality loans (Because, historically, the Dutch repay their debt and are near 0 default. So they are really good quality assets). But, because of the Basel III rules, those cannot be used to fulfill the new liquidity obligations.
At the same time, worst assets (including spanish loans that have a way higher default rate) can be used.
It is important to understand that the Dutch banks don't have "a hole" of 270 billions. They have those 270 billions in high quality assets (mortgage backed securities from some of the best loans of the planet). But they cannot use it to fulfill their new european obligations because those loans were given at 95% the value of the home (Basell III rules accept only loans up to 80% the value of the home to count toward the new liquidity obligation).
It is problematic of course, but not as problematic as if they actually had to find 270 billions out of nothing. Because, even if they cannot use those loans for the new liquidity rules, the loans are still there. They still possess them.
Possible solutions :
1) They ask for a change in Basel III rules, because that part of the rules is stupid. Seriously, accounting risky spanish loans while refusing ultra secured dutch loans... wtf.
2) They sell those mortgage backed securities (possibly at a discount) to some private investors. In that case, they will have to come with the rest of the money (the discount). But it will never be 270 billions, it will be far less. And there will be buyers because those are high quality assets. The real problem being that no european banks can buy it, since it is not taken into account for Basel III (so they will have to sell at a discount to private investors).
TL;DR : yeah it is stupid and problematic but not as problematic as a 270 billion deficit. The actual amount missing is just the discount they will have to accept (probably a small % of the total 270 billion).
I think the main issue facing the Dutch banks right now is that the Dutch property bubble is on the verge of exploding. I found a nice article that explains it better than I ever could
A big part of it is also because the laws surrounding mortgages have been changed 3 times in a year which caused a lot of confusion on the market and a lot f people obv won't buy a house when they don't know what the politicians will decide in 3 months time concerning the biggest financial transaction in your life.
People want me to believe that businesses and governments "learn from the past" and don't need to be regulated, but then we have people like you. Banks lend out too much while consumers borrow too much, but that's apparently not the problem. "Burdensome government, that's the reason why people are underwater on their mortgages now! We've seen this play a dozen times now, but the causes of Dutch woes are different than those lazy people in Spain!"
Have to say that's true: in 2008 our government was bragging about how our financial system was strong and that this financial crisis wasnt going to hurt Spain , damn , I even remember Zapatero going to some USA conference to claim to the world how good our banks were and to teach the world how things were made over here.
well... hope your countries didnt take too much notes of that.
I see many similarities with the netherlands , also , the fact that most banks here loaned the 80% in one mortgage and then gave you personal credits if needed (to each in a couple for example , I myself and my couple had been offered that in early 2009 , thank god i am living in a rented house) to get the missing money you needed... looks a lot like a 95% mortgage too. well that was of course during the free-for-all-credit-ahoy! time , now you cant get a mortgage if you havent got already half of the money or the bank is selling you with prices from 2008 a house thats not worth even half of that price now.
Im no expert so , only talking about feelings here , hope the netherlands doesnt get fucked as were getting over here with businesses doing what they want with salaries and with people like me (on my late 20's) with no hope of getting any of the laboral rights the generations before me had.
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
Thank you. After reading the Bloomberg article, here is what I understand :
The Dutch banks have high quality loans (Because, historically, the Dutch repay their debt and are near 0 default. So they are really good quality assets). But, because of the Basel III rules, those cannot be used to fulfill the new liquidity obligations.
At the same time, worst assets (including spanish loans that have a way higher default rate) can be used.
It is important to understand that the Dutch banks don't have "a hole" of 270 billions. They have those 270 billions in high quality assets (mortgage backed securities from some of the best loans of the planet). But they cannot use it to fulfill their new european obligations because those loans were given at 95% the value of the home (Basell III rules accept only loans up to 80% the value of the home to count toward the new liquidity obligation).
It is problematic of course, but not as problematic as if they actually had to find 270 billions out of nothing. Because, even if they cannot use those loans for the new liquidity rules, the loans are still there. They still possess them.
Possible solutions :
1) They ask for a change in Basel III rules, because that part of the rules is stupid. Seriously, accounting risky spanish loans while refusing ultra secured dutch loans... wtf.
2) They sell those mortgage backed securities (possibly at a discount) to some private investors. In that case, they will have to come with the rest of the money (the discount). But it will never be 270 billions, it will be far less. And there will be buyers because those are high quality assets. The real problem being that no european banks can buy it, since it is not taken into account for Basel III (so they will have to sell at a discount to private investors).
TL;DR : yeah it is stupid and problematic but not as problematic as a 270 billion deficit. The actual amount missing is just the discount they will have to accept (probably a small % of the total 270 billion).
I think the main issue facing the Dutch banks right now is that the Dutch property bubble is on the verge of exploding. I found a nice article that explains it better than I ever could
A big part of it is also because the laws surrounding mortgages have been changed 3 times in a year which caused a lot of confusion on the market and a lot f people obv won't buy a house when they don't know what the politicians will decide in 3 months time concerning the biggest financial transaction in your life.
Its not the mortgage laws but the overall insane house prices. And whenever the stupidly high prices drop a tiny bit the brokers all scream the sky is falling.
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
Thank you. After reading the Bloomberg article, here is what I understand :
The Dutch banks have high quality loans (Because, historically, the Dutch repay their debt and are near 0 default. So they are really good quality assets). But, because of the Basel III rules, those cannot be used to fulfill the new liquidity obligations.
At the same time, worst assets (including spanish loans that have a way higher default rate) can be used.
It is important to understand that the Dutch banks don't have "a hole" of 270 billions. They have those 270 billions in high quality assets (mortgage backed securities from some of the best loans of the planet). But they cannot use it to fulfill their new european obligations because those loans were given at 95% the value of the home (Basell III rules accept only loans up to 80% the value of the home to count toward the new liquidity obligation).
It is problematic of course, but not as problematic as if they actually had to find 270 billions out of nothing. Because, even if they cannot use those loans for the new liquidity rules, the loans are still there. They still possess them.
Possible solutions :
1) They ask for a change in Basel III rules, because that part of the rules is stupid. Seriously, accounting risky spanish loans while refusing ultra secured dutch loans... wtf.
2) They sell those mortgage backed securities (possibly at a discount) to some private investors. In that case, they will have to come with the rest of the money (the discount). But it will never be 270 billions, it will be far less. And there will be buyers because those are high quality assets. The real problem being that no european banks can buy it, since it is not taken into account for Basel III (so they will have to sell at a discount to private investors).
TL;DR : yeah it is stupid and problematic but not as problematic as a 270 billion deficit. The actual amount missing is just the discount they will have to accept (probably a small % of the total 270 billion).
I think the main issue facing the Dutch banks right now is that the Dutch property bubble is on the verge of exploding. I found a nice article that explains it better than I ever could
A big part of it is also because the laws surrounding mortgages have been changed 3 times in a year which caused a lot of confusion on the market and a lot f people obv won't buy a house when they don't know what the politicians will decide in 3 months time concerning the biggest financial transaction in your life.
People want me to believe that businesses and governments "learn from the past" and don't need to be regulated, but then we have people like you. Banks lend out too much while consumers borrow too much, but that's apparently not the problem. "Burdensome government, that's the reason why people are underwater on their mortgages now! We've seen this play a dozen times now, but the causes of Dutch woes are different than those lazy people in Spain!"
That wasn't what I was trying to say... housing market reforms were definitely needed here it's just that they had to make their reform plans once. This way everyone knows whats going to happen and people don't have to worry that the rules will change a couple of months later.
6 more months till the german elections,then we will know how they eurozone will handle the crisis and the economy for the next few years. I do hope and expect the europeans to change the austerity policy to a policy of monetary easing the day after merkel has been reelected. There is definatly room for monetary easing, as japan and the usa do it at a huge scale already. Maybe euro can go back to 1.20 or even 1.10 after the elections. Atm euro is undervalued imo, it should be like ~ 1.40 if current euro austerity combined with usa and japan monetary easing was here to stay.
Thank you. After reading the Bloomberg article, here is what I understand :
The Dutch banks have high quality loans (Because, historically, the Dutch repay their debt and are near 0 default. So they are really good quality assets). But, because of the Basel III rules, those cannot be used to fulfill the new liquidity obligations.
At the same time, worst assets (including spanish loans that have a way higher default rate) can be used.
It is important to understand that the Dutch banks don't have "a hole" of 270 billions. They have those 270 billions in high quality assets (mortgage backed securities from some of the best loans of the planet). But they cannot use it to fulfill their new european obligations because those loans were given at 95% the value of the home (Basell III rules accept only loans up to 80% the value of the home to count toward the new liquidity obligation).
It is problematic of course, but not as problematic as if they actually had to find 270 billions out of nothing. Because, even if they cannot use those loans for the new liquidity rules, the loans are still there. They still possess them.
Possible solutions :
1) They ask for a change in Basel III rules, because that part of the rules is stupid. Seriously, accounting risky spanish loans while refusing ultra secured dutch loans... wtf.
2) They sell those mortgage backed securities (possibly at a discount) to some private investors. In that case, they will have to come with the rest of the money (the discount). But it will never be 270 billions, it will be far less. And there will be buyers because those are high quality assets. The real problem being that no european banks can buy it, since it is not taken into account for Basel III (so they will have to sell at a discount to private investors).
TL;DR : yeah it is stupid and problematic but not as problematic as a 270 billion deficit. The actual amount missing is just the discount they will have to accept (probably a small % of the total 270 billion).
I think the main issue facing the Dutch banks right now is that the Dutch property bubble is on the verge of exploding. I found a nice article that explains it better than I ever could
A big part of it is also because the laws surrounding mortgages have been changed 3 times in a year which caused a lot of confusion on the market and a lot f people obv won't buy a house when they don't know what the politicians will decide in 3 months time concerning the biggest financial transaction in your life.
Its not the mortgage laws but the overall insane house prices. And whenever the stupidly high prices drop a tiny bit the brokers all scream the sky is falling.
Denmark is just as heavily invested in inflated housing prices and now IMF urges Denmark to drop risky mortgages Several danish banks have failed and we are getting close to one of the bigger banks bellying up. Having this potential bomb under our economy if the interests start to increase is devastating for the trust.
Netherlands is nowhere near the only place where houses are leveraged to far "below water" and the underlying problems aren't solved! To compound the problem even further the current danish government promised to keep the house-owners from extra taxes during the 2012 election so they are likely to take another crushing blow if they even think about solving the underlying problem (They are already historically unpopular for breaking several promises and they have become so toxic that the prime minister has been asked to stay away from several local elections by her own party members! However, breaking this one is gonna bring them to a completely different circle of hell.)
We can only hope for the crisis to continue in southern europe, cause if they start to grow, the increase in interests will crash the rest of the northern european housing bubbles!
This whole deal is creating a huge speculation on the Bitcoins, which is good for nerds that kept their graphic card mining 2 years ago... Sadly, not one of them!
EPT
