EconomicsEuroZone: Banks: Too big to fail, or too big to save?

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Financial Times (UK) email newsletter FT Exclusive Comment (Nov14,2k11)


- Posted here by EconoMix
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Sever the death spiral link of banks and governments The financial fate of Europe’s banks and its governments are inextricably linked: because the banks are the primary source of funding for government deficits, government debt represents a large proportion of the asset base of most eurozone banks. Insolvency of one therefore threatens insolvency of the other. The prevailing narrative is that this symbiosis makes the largest European banks too big to fail, driving eurozone governments to provide massive capital infusions and guarantees to banks during financial crises. The truth, however, is that, given the level of eurozone government indebtedness and the relative size of Europe’s banks, Europe’s largest banks are now too big to save.  Read more ... pay entry at http://link.ft.com/r/IOCBMM/JE3K6Z/TFRK7/B5WQI1/4C4VKU/7V/h?a1=2011&a2=11&a3=14

PoliticsEurope: Soros advice: Save banks before govts -- R u saying, Save the bank of Greece, let the Greek govt collapse, huh?

Financial Times email newsletter [Dec14,2k10]

Breaking News  George Soros: Europe should rescue banks before states BanksB4Govts -- a Soros Doctrine The architects of the euro knew that it was incomplete when they designed it. The currency had a common central bank but no common treasury – unavoidable given that the Maastricht treaty was meant to bring about monetary union without political union. The authorities were confident, however, that if and when the euro ran into a crisis they would be able to overcome it. After all, that is how the European Union was created, taking one step at a time, knowing full well that additional steps would be required. With hindsight, however, one can identify other deficiencies in the euro of which its architects were unaware. A currency supposed to bring convergence has produced divergences instead. That is because the founders did not realise that imbalances may emerge not only in the public sphere but also in the private sector. http://link.ft.com/r/ZE9K33/UUKQ5L/IXWCB/5CN34H/PRVRJ6/HK/h?a1=2010&a2=12&a3=14 -- EconoMix posting a Soros Doctrine more info ... Soros says EU shoud recapitalize banks, lower bailout interest