Monday, December 13, 2010

So when will the money run out?

This is more than a little concerning for those who think that the EU will be able to weather the storm,
THE European Central Bank is considering requesting an increase in its capital to help cope with the rising costs of fighting the eurozone debt crisis, Reuters sources have said.

ECB policymakers have repeatedly signalled that the central bank cannot bear the brunt of fire-fighting against bond market attacks on highly indebted euro zone states.
“The issue is that the ECB is worried about potential losses from its bond buying,” one source said.
“At the moment we are buying very modest amounts, but what if that is increased, and what if the bonds you buy are suddenly worth 30 per cent less?” the source said, referring to the risk of a writedown on a eurozone government’s debt.
The report continues,
The ECB declined to comment.
Cannot say that I am surprised.


Anonymous said...

Spain - January-February.
Game over.

Witterings From Witney said...

Sort of sinks My word is my bond"!

Anonymous said...

The game has changed as each domino has fallen. When Greece's economy went down, any Greek threats to leave the euro were matched with EU threats of eviction from the EU. When the EU pushed Ireland over by publicising Ireland's difficulties, the new emphasis was on protecting European non-Irish banks (by under-writing over-exposed Irish banks to prevent their collapse tipping other European member countries' banks who had unwisely lent to the Irish) regardless of the consequence for Ireland. And what about Portugal - likely to be next? The EU backing Portugal financially to discourage its collapse from over-whelming Spain. And after Spain? Well, what about Italy, Belgium, & Cyprus (the latter only in the euro 3 years, but now exposed because it's been a banking bolt-hole for footless Greek money, which may move on if Cyprus falters - as is quite likely). Anything could happen then - probably chaos! And what about France? Once France is in any sort of trouble, if Germany will not bail it out, then France almost certainly will go back to the franc - & in due course the franc fort that Chirac used to worship. When will the critical moment be? If it's not Spain, then cedrtainly when Italy or Belgium start toppling.