Comments on: The solvency solution for Europe: time to do the unthinkable http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/ Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Parki http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/#comment-37458 Mon, 12 Sep 2011 18:22:08 +0000 http://blogs.reuters.com/great-debate/?p=10225#comment-37458 I’m afraid the horse has already bolted, the greed killed the hope and War is next

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By: chris9059 http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/#comment-37452 Mon, 12 Sep 2011 14:41:30 +0000 http://blogs.reuters.com/great-debate/?p=10225#comment-37452 Another bank-centric solution to the world’s economic problems. If we just keeping throwing free money at the bankers everything will be OK. Of course that has worked out well in the US where the bankers have continued to loot their own institutions while refusing to extend credit to qualified borrowers, the real unemployment rate is 16%, growth is stagnant, millions remain underwater on their mortgages and the Tea Party blames unions and the poor for the greed and failure of our financial elites.

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By: Shiv139 http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/#comment-37409 Sun, 11 Sep 2011 17:27:40 +0000 http://blogs.reuters.com/great-debate/?p=10225#comment-37409 If the PIIG’s leave EZ, there will be default, which will be disruptive to financial markets. In addition, a flight to safety of the stronger Euro (similar to the Swiss Frac) would weaken German exports significantly. That would hurt global growth big time. I think the only realistic solution is accepting higher inflation expectations, expanding the balance sheet, ECB telegraphing intent to buy bonds without limit and backing that with action. EZ will need to adopt seigniorage (printing money), higher taxes and fiscal cuts throughout Europe once deleveraging starts. Strong EZ members will have to share in the pain of weak EZ members while they pursue fiscal & political integration. Approach has to be a federal – with “United States of Europe” helping the weaker states through a rough patch and sharing in the pain across both strong and weak EZ. And then the bill would be paid through fiscal austerity, inflation (reducing the real value of debt), higher taxes and growth over the next one to two decades. Slow growth over this period has to be accepted, global growth will be helped if China allows the Yuan to strengthen and expands its domestic economy through increased consumption with lower savings and investment (would probably keep a lid on speculative premiums in commodity prices).

Won’t be politically paletable unless people understand that an orderly exit would be a worse outcome for strong EZ and a disorderly exit would be far worse. If it cant be sold, the outcome will likely be disintegration.

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By: Puerto http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/#comment-37274 Thu, 08 Sep 2011 10:36:04 +0000 http://blogs.reuters.com/great-debate/?p=10225#comment-37274 It doesn’t seem to be realized that the IMF, ECB etc are NOT bailing out Greece and other COUNTRIES; they are bailing out the BANKS that made ill-advised loans.

The citizens of Greece etc are now being ‘taken to the cleaners’ to get the banks out of trouble. It should be the banks that are left to fail or recapitalize.

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By: About-Face http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/#comment-37270 Thu, 08 Sep 2011 06:29:07 +0000 http://blogs.reuters.com/great-debate/?p=10225#comment-37270 The more radical option to start with is to remove this instrument call the credit default swap from being traded across all markets.
Secondly, remove the complex derivatives, follow by stop listening to the bankers and do something real for the economy like Switzerland.

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By: Lambick http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/#comment-37231 Wed, 07 Sep 2011 19:17:42 +0000 http://blogs.reuters.com/great-debate/?p=10225#comment-37231 Deleveraging was bound to hurt, but while we go through the japanised rigours that come with the job, why worry? We were going to whack the banks anyway, that’s what we do after a crash, but is it really such a problem to lend them some money, whether to recapitalise or to keep them funded? TARP is coming back to the government with appropriate profits for the taxpayer, isn’t it? There is the risk that the banks go under anyway and that would be painful, but as things stand now we just need banks, no way around it. Restoring faith in the economy, not only in banks, is going to take a while. In the meantime Europeans better watch out not to get fleeced by the Greek and Italians (with the man who screwed a country).

And for CarlOmunificent a Brazilian comment on inequality: O sol nasce para todos, sombra há para poucos.

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By: BowMtnSpirit http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/#comment-37217 Wed, 07 Sep 2011 17:21:27 +0000 http://blogs.reuters.com/great-debate/?p=10225#comment-37217 So let me get this straight Dow: Your first step is to hand additional money to the banks (“Recapitalize the banks”), which of course is printed by the central banks, to make them feel better (“winning the psychological war of confidence”)? Even while you acknowledge that recapitalization is not technically necessary? (“…more about winning the psychological war of confidence than it is the actual recapitalization of the banking system…” and “pointless to repeat that recapitalization needs are small.”)

So perhaps this puts me among those with “superficial understanding,” but your point is, in my humble opinion, complete and utter nonsense. You must believe that the only people who are reading your piece are monetary managers and hedge fund managers, such as yourself, and no one else. Certainly, you consider no one else.

That “recapitalization” idiocy you would prescribe creates no employment, creates no production, creates nothing but “profits.” You (correctly) point out that liquidity solutions are untenable, and your first step is nothing other than a liquidity transfer — from the pockets of the irresponsible public you appear to despise to the capital accounts of the banks you thrive upon.

Your head is so far up in the ether (or elsewhere) that you have no capacity to see that your program does nothing but preserve the same dysfunctional structure that has led our society to this point in the first place. You need to get your feet on the ground, and quit clicking your heels together.

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By: calvinbama http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/#comment-37200 Wed, 07 Sep 2011 14:53:16 +0000 http://blogs.reuters.com/great-debate/?p=10225#comment-37200 Great solution stanrich. Fiat money is rapidly becoming a farse many places in the world. You can’t put dollars in your gas tank to get to work, or digits on a computer screen in your stomach. I’ve been doing my best to transfer my wealth from bank accounts into hard assets like real estate.

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By: hariknaidu http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/#comment-37197 Wed, 07 Sep 2011 14:28:44 +0000 http://blogs.reuters.com/great-debate/?p=10225#comment-37197 This is a serious think-piece and accordingly should be given thoughtful consideration.

Let’s look at the policy issues arising from liquidity vs. solvency contagion and anglo-american market sentiments (politically) against Euro:

The outcome in Brussles will end up isolating UK (including its City banking sector) from further involvement in Euro-17 policy decision-making.

It will include Sweden and Denmark and other’s who don’t subscribe to Euro regime.

Bottom line: emergence of two-speed Europe Project in which may be 11 countries are only involved at the centre in policy decision-making on way forward.

Fiscal (Transfer) Union or not; it’s now on the planning board of even major CDU (German) politicians now.

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By: stanrich http://blogs.reuters.com/great-debate/2011/09/06/the-solvency-solution-for-europe-time-to-do-the-unthinkable/#comment-37195 Wed, 07 Sep 2011 14:21:29 +0000 http://blogs.reuters.com/great-debate/?p=10225#comment-37195 Forcing banks to hold “reserves” is an exercise in futility. All they are doing is holding paper that becomes more worthless by the hour.

Instead, start requiring banks and eventually governments to hold a basket of precious metals, rare earths, etc. in a set ratio to their capital structure. Make sure they hold the real thing in their vaults with regular inspections and watch the entire financial system change from wild currency fluctuations and printing presses running day and night to a much more orderly environment.

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