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Resurrection of Eurozone Debt Crisis Imminent?

Politics / Euro-Zone Oct 31, 2011 - 03:12 AM GMT

By: DK_Matai

Politics

Best Financial Markets Analysis ArticleHow fine are the emperor's new clothes? How beautifully spun is the yarn? Eurozone crisis may resurrect in the coming weeks because:


Resurrection of Eurozone Crisis

1. China may only make a token contribution, rather than ploughing in the exorbitant amounts they are expected to invest, in the trillion euro common pot;

2. Italian 10-year bond yields are at the highest level since the third largest industrial economy joined the Eurozone, which is a sign of stress increasing not decreasing as contagion spreads;

3. �Voluntary� write-downs of 50% of Greek debt have not triggered credit default swaps and the amounts written down are still less than what the market value suggests, indicating further write-downs in future;

4. European Financial Stability Fund � EFSF � may guarantee 20% of losses on future debt issuance but the potential for deeper haircuts, as witnessed in the case of Greece, would still require abnormally high yields to attract investors;

5. Solution of the Eurozone crisis demands new money on the table in trillions of euros and all that has been provided to date are old promises, smoke and mirrors and no new cash to contain the crisis;

6. Fundamental assumptions in regard to economic growth and cost of servicing national debt are overly optimistic and may have to be substantially revised in the wake of intensified austerity measures;

7. If the banks have to improve their tier-1 capital to asset ratio, for many it will be more attractive to reduce lending and jettison parts of the loan book than to seek tier-1 capital increases in tough market conditions, thereby inadvertently slowing their national economies; and

8. All the 13 previous Eurozone summits, prior to the latest one, have mostly enjoyed short-lived stock market rallies in their aftermath which lose steam; why should this latest �solution� be any different?

Fundamental Question: How many times can European leaders present ultimate �comprehensive� solutions to solve the Eurozone crisis once and for all, only to find that �solution� was inadequate in a matter of weeks? At what point does the credibility of European leaders get questioned by financial markets?

What are your thoughts, observations and views? We are hosting an Expert roundtable on this issue at ATCA 24/7 on Yammer.

By DK Matai

www.mi2g.net

Asymmetric Threats Contingency Alliance (ATCA) & The Philanthropia

We welcome your participation in this Socratic dialogue. Please access by clicking here.

ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

The Philanthropia, founded in 2005, brings together over 1,000 leading individual and private philanthropists, family offices, foundations, private banks, non-governmental organisations and specialist advisors to address complex global challenges such as countering climate chaos, reducing radical poverty and developing global leadership for the younger generation through the appliance of science and technology, leveraging acumen and finance, as well as encouraging collaboration with a strong commitment to ethics. Philanthropia emphasises multi-faith spiritual values: introspection, healthy living and ecology. Philanthropia Targets: Countering climate chaos and carbon neutrality; Eliminating radical poverty -- through micro-credit schemes, empowerment of women and more responsible capitalism; Leadership for the Younger Generation; and Corporate and social responsibility.

© 2011 Copyright DK Matai - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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