14/11/11 - Former British PM Tony Blair warns of catastrophe if Eurozone collapses

November 14, 2011 – LONDON – Former British Prime Minister Tony Blair warned on Sunday that the collapse of the euro would be “catastrophic” and urged Europe to move fast to support the currency. Blair said European leaders faced “very difficult and painful” choices and a “long-term framework of credibility” was needed to see off the crisis. Speaking following the resignation of Italian Prime Minister Silvio Berlusconi on Saturday, Blair said there had “never been a tougher time to be a leader than right now.” But he said the “whole weight” of European institutions – including the European Central Bank – must get behind the euro if it was to survive. He told BBC TVthat economies had to align and that “the myth that the Italian and German economies were the same – that 10-year myth has now evaporated.” Measures required to bring stability to the euro would be painful, he warned, but added: “If the single currency broke up, it would be catastrophic.” Blair, who was premier for a decade until 2007, was also asked if his former finance minister Gordon Brown had been right to push hard for Britain to stay out of the euro when Labour was in power. “He was right, although I would also say by the way, I was never in favor of doing it unless the economics were right,” Blair replied. British Prime Minister David Cameron will meet German Chancellor Angela Merkel in Berlin on Friday for talks on the euro’s difficulties and the economy. Cameron said on Friday there was still “a big question mark” over the future of the Eurozone and stressed it was not in Britain’s interests for the single currency to break up but the government is “preparing for every eventuality.” –Channel News Asia

19/10/11 - Marketwatch warns EU banks will crash Wall Street

October 19, 2011 – NEW YORK – History inevitably repeats itself: Arab Spring triggered Wall Street Fall. Next, the raging European monetary collapse will ripple through America’s banking system, completing the 2008 meltdown that never ended because Wall Street fought all reforms. But now, a bigger meltdown as history repeats a dangerous cycle like the 1929 Crash and Great Depression. History will also deal a fatal blow to Wall Street. Weiss adds a key warning: No bank bailouts. America’s banking system is bankrupt, structurally and morally. Washington is broken. And thanks to the Occupiers Revolution the masses will never accept new bank bailouts. Never. They’ll toss politicians and overthrow government first. No new bailouts will be the stake in the heart of Wall Street, ending the “greed is good” power of America’s “bloodsucking vampire squid,” handing the Occupiers new political power in Washington. Weiss’s worst-case scenario highlights everything we’ve both been warning investors about for a long time. The 2008 meltdown never ended, lessons never learned. But now the end game is accelerating. Listen closely: Weiss final warning to all investors: “Get all or most of your money out of danger immediately … above all, stay safe!” Prepare for the coming bank collapse. And discover how this historic scenario will empower the Occupiers message to get money out of elections: “One citizen. One dollar. One vote.” –Market Watch

Yes, coming soon says Martin Weiss in his “7 Major Advance Warnings,” which is “bound to have a life-changing impact on nearly all investors in the U.S. and around the globe.” His new Weiss Ratings warnings are the “most important” in a 40-year career. The stress on Wall Street banks will force them back to Congress for more bailouts…

1. Greece will default very soon
2. The contagion of fear will spread
3. European Mega Banks will collapse
4. EU governments suffer new credit rating downgrades
5. Spain and Italy next to face defaults on their massive debts
6. Global debt markets will suffer a critical meltdown
7. Vicious cycle: sovereign defaults, bank failures, global depression

contribution Luisport

17/9/11 - U.S. meets with Eurozone finance ministers to head off Greece default

BRUSSELS – Eurozone chief Jean-Claude Juncker says the 17 countries using the European common currency have delayed until October a decision on an 8 billion-euro ($11 billion) installment of a bailout loan for Greece. The tranche is seen as needed to keep Greece from a disastrous debt default. But officials from the eurozone and the International Monetary Fund (IMF) have delayed their assessment amid questions about whether Athens is doing enough to cut the country’s deficit. Juncker, speaking at a news conference in Wroclaw, Poland, after a meeting of eurozone finance ministers, said officials welcomed “the renewed, firm commitment of Greece” to its austerity program, but they “would decide in October on the next tranche.” The talks were also attended by U.S. Treasury Secretary Timothy Geithner, whose presence at the meeting in the city of Wroclaw is seen as a sign of the gravity of the eurozone’s debt crisis. In a closed address, Geithner reportedly warned that deepening divisions in the eurozone over the Greek debt posed a “catastrophic risk.” –Radio Free Europe

15/9/11 - 20 Signs Of Imminent Financial Collapse In Europe

Are we on the verge of a massive financial collapse in Europe? Rumors of an imminent default by Greece are flying around all over the place and Greek government officials are openly admitting that they are running out of money. Without more bailout funds it is absolutely certain that Greece will soon default on their debts. But German officials are threatening to hold up more bailout payments until the Greeks "do what they agreed to do". The attitude in Germany is that the Greeks must now pay the price for going into so much debt. Officials in the Greek government are becoming frustrated because the more austerity measures they implement, the more their economy shrinks. As the economy shrinks, so do tax payments and the budget deficit gets even larger. Meanwhile, hordes of very angry Greek citizens are violently protesting in the streets. If Germany allows Greece to default, that is going to start financial dominoes tumbling around the globe and it is going to be a signal to the financial markets that there is a very real possibility that Portugal, Italy and Spain will be allowed to default as well. Needless to say, all hell would break loose at that point.
So why is Greece so important?
Well, there are two reasons why Greece is so important.
Number one, major banks all over Europe are heavily invested in Greek debt. Since many of those banks are also very highly leveraged, if they are forced to take huge losses on Greek debt it could wipe many of them out.
Secondly, if Greece defaults, it tells the markets that Portugal, Italy and Spain would likely not be rescued either. It would suddenly become much, much more expensive for those countries to borrow money, which would make their already huge debt problems far worse.
If Italy or Spain were to go down, it would wipe out major banks all over the globe.
Recently, Paul Krugman of the New York Times summarized the scale of the problem the world financial system is now facing....

Financial turmoil in Europe is no longer a problem of small, peripheral economies like Greece. What's under way right now is a full-scale market run on the much larger economies of Spain and Italy. At this point countries in crisis account for about a third of the euro area's G.D.P., so the common European currency itself is under existential threat.

Most Americans don't spend a lot of time thinking about the financial condition of Europe.
But they should.
Right now, the U.S. economy is really struggling to stay out of another recession. If Europe has a financial meltdown, there is no way that the United States is going to be able to avoid another huge economic downturn.
If you think that things are bad now, just wait. After the next major financial crisis what we are going through right now is going to look like a Sunday picnic.
The following are 20 signs of imminent financial collapse in Europe....
#1 The yield on 2 year Greek bonds is now over 60 percent. The yield on 1 year Greek bonds is now over 110 percent. Basically, world financial markets now fully expect that Greece will default.
#2 European bank stocks are getting absolutely killed once again today. We have seen this happen time after time in the last few weeks. What we are now witnessing is a clear trend. Just like back in 2008, major banking stocks are leading the way down the financial toilet.
#3 The German government is now making preparations to bail out major German banks when Greece defaults. Reportedly, the German government is telling banks and financial institutions to be prepared for a 50 percent "haircut" on Greek debt obligations.
#4 With thousands upon thousands of angry citizens protesting in the streets, the Greek government seems hesitant to fully implement the austerity measures that are being required of them. But if Greece does not do what they are being told to do, Germany may withhold further aid. German Finance Minister Wolfgang Schaeuble says that Greece is now "on a knife's edge".
#5 Germany is increasingly taking a hard line with Greece, and the Greeks are feeling very pushed around by the Germans at this point. Ambrose Evans-Pritchard made this point very eloquently in a recent article for the Telegraph....

Germany's EU commissioner Günther Oettinger said Europe should send blue helmets to take control of Greek tax collection and liquidate state assets. They had better be well armed. The headlines in the Greek press have been "Unconditional Capitulation", and "Terrorization of Greeks", and even "Fourth Reich".

#6 Everyone knows that Greece simply cannot last much longer without continued bailouts. John Mauldin explained why this is so in a recent article....

It is elementary school arithmetic. The Greek debt-to-GDP is currently at 140%. It will be close to 180% by year's end (assuming someone gives them the money). The deficit is north of 15%. They simply cannot afford to make the interest payments. True market (not Eurozone-subsidized) interest rates on Greek short-term debt are close to 100%, as I read the press. Their long-term debt simply cannot be refinanced without Eurozone bailouts.

#7 The austerity measures that have already been implemented are causing the Greek economy to shrink rapidly. Greek Finance Minister Evangelos Venizelos has announced that the Greek government is now projecting that the economy will shrink by 5.3% in 2011.
#8 Greek Deputy Finance Minister Filippos Sachinidis says that Greece only has enough cash to continue operating until next month.
#9 Major banks in the U.S., in Japan and in Europe have a tremendous amount of exposure to Greek debt. If they are forced to take major losses on Greek debt, quite a few major banks that are very highly leveraged could suddenly be in danger of being wiped out.
#10 If Greece goes down, Portugal could very well be next. Ambrose Evans-Pritchard of the Telegraph explains it this way....

Yet to push Greece over the edge risks instant contagion to Portugal, which has higher levels of total debt, and an equally bad current account deficit near 9pc of GDP, and is just as unable to comply with Germany's austerity dictates in the long run. From there the chain-reaction into EMU's soft-core would be fast and furious.

#11 The yield on 2 year Portuguese bonds is now over 15 percent. A year ago the yield on those bonds was about 4 percent.
Click here for complete article:
http://theeconomiccollapseblog.com/archives/20-signs-of-imminent-financial-collapse-in-europe

14/9/11 - Crisis deepens: European banking system on the edge of an abyss

PARIS – Where now for European banks? Sir Howard Davies, former chairman of Britain’s Financial Services Authority, said on BBC Radio’s Today program on Tuesday morning that he thought the French government was only days away from having to recapitalize the country’s banking system for a second time. Italy had to pay the highest spread since joining the euro to sell its bonds on Tuesday. There are growing fears over whether Europe’s largest borrower can stay the course. The Eurozone sovereign debt crisis is meanwhile exacting a devastating toll on the European banking system as a whole, the UK included. With their high exposure to Eurozone debt, the problem is particularly acute for the French banking goliaths, BNP Paribas and Societe Generale. BNP alone has a Eurozone sovereign debt exposure of some €75bn, amounting to roughly 6pc of total assets, including €14bn of Greek debt and €21bn of Italian government bonds. And that’s just BNP. The other two major French banks, SocGen and Credit Agricole each have exposures of a similar order of magnitude. Collectively, French banks have €56bn of Greek sovereign bonds alone. They’ve so far only written down this Greek debt by around 20pc, or in line with the restructuring agreed at the time of the last bailout. That’s nowhere near mark to market. In the increasingly likely event of Germany kicking the Greeks out of the Eurozone altogether, Greek debt will become close to worthless. Greece is already effectively a cash only economy. Most forms of credit has effectively dried up, the Greek banking system is finished, and capital controls to prevent what little money that remains from leaving the country are surely only a matter of time. European banking must prepare for the worst as far as Greece is concerned. As for the remainder of the Eurozone sovereign exposure, there’s been no write down at all among banks on these bonds. If there’s a wider problem of default, the bad debt recognition has yet to come.-Telegraph

Disaster looms if Greece defaults: International alarm over Europe’s debt crisis hit new heights on Tuesday, with President Barack Obama pressing the bloc’s big countries to show leadership as talk of a Greek default escalated and markets heaped pressure on Italy. “I think there is a possibility, if the wrong steps are taken, that the system goes off the rails,” Sergio Marchionne, the CEO of Italian carmaker Fiat, told reporters in Frankfurt when asked if the euro’s survival was at risk. Merkel said in a radio interview that Europe was doing everything in its power to avoid a Greek default and urged politicians in her own coalition to weigh their words carefully to avoid creating turmoil on financial markets. Her economy minister said earlier this week that there should be no taboos in stabilizing the euro, including an orderly bankruptcy of Greece. And lawmakers from her coalition have said in recent days that Greece may have to leave the euro zone — a move Citigroup’s chief economist warned would lead to “financial and economic disaster.” “As soon as Greece has exited, we expect the markets will focus on the country or countries most likely to exit next from the euro area,” Willem Buiter said in a note published on Tuesday. –Reuters

Crisis could unravel markets across the world: We’re getting close to a full-blown banking crisis in Europe,” El-Erian, Pimco’s chief executive officer and co-chief investment officer, said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “We are in a synchronized global slowdown. There’s very little confidence in economic policy making both in Europe and the U.S.” The World Bank and the IMF meet Sept. 23-25 in Washington as European officials work to keep the currency union from unraveling while weighing whether to allow Greece to default. French banks have become a focal point because of their holdings of bonds issued by the euro region’s most-indebted nations, topping the list of Greek creditors with $56.7 billion in overall exposure, according to a June report by the Bank for International Settlements. “The light should be flashing yellow, if not red, in Washington, D.C., and hopefully the IMF meeting can be the catalyst for getting to a common analysis and setting the stage for the G-20,” El-Erian said from Pimco’s Newport Beach, California-based headquarters. –Business Week

13/9/11 - Greece, Europe struggle to contain debt crisis

BERLIN (AP) — German Chancellor Angela Merkel sought Tuesday to calm market fears that Greece is heading for a chaotic default as Europe struggles to contain a crippling financial crisis.

Merkel rejected the notion that a Greek bankruptcy — a possibility raised a day earlier by her deputy that spooked markets — would provide a quick solution to the eurozone debt crisis.

She argued that Europe instead needs to stick to its efforts to cut budget deficits and improve its competitiveness, and that resolving the crisis would be "a very long, step-by-step process."

Her comments came ahead of a teleconference Wednesday with French President Nicolas Sarkozy and Greek Prime Minister George Papandreou.

Fears of an imminent Greek default pushed interest rates on the country's 10-year government bonds up Tuesday to a new record of over 24 percent, although Merkel sounded optimistic regarding Greece's chances of getting the next batch of bailout cash from the so-called troika — the European Commission, the European Central Bank and the International Monetary Fund.

Representatives from the three organizations are due back in Athens soon.

"Everything that I hear from Greece is that the Greek government has hopefully understood the signs of the time and is now doing the things that are on the daily agenda," Merkel told rbb-Inforadio. "The fact that the troika is returning means that Greece has started doing some things that need to be done."

Merkel also sought to defuse suggestions by Vice Chancellor Philipp Roesler and others that a default by Greece is a possibility.

Roesler raised on Monday the specter of an "orderly insolvency" in the future, a notion the Dutch finance minister indicated was being considered.

Jan Kees de Jager told Dutch financial news show "RTL Z" on Tuesday that his ministry was "prepared or preparing for all conceivable scenarios and even the almost inconceivable scenarios."

Asked if that included a Greek default, he said "It includes all likely and unlikely scenarios, but I can't tell you specifically which."

Merkel dismissed the idea that the debt crisis "could evaporate with one buzzword — be it eurobonds or insolvency or other words."

"I am deeply convinced that won't happen," she told reporters after meeting Finnish Prime Minister Jyrki Katainen. The chancellor didn't mention Roesler but pointed to the potential dangers of untested action.

"We must always keep in view that we do everything we do in a controlled way, that we know the consequences, because otherwise a situation could very quickly arise in the eurozone ... that none of us wants and that could have very, very difficult consequences for us all," Merkel said.

She suggested that even an orderly default couldn't come any time soon, noting there wasn't even a mechanism in place for a eurozone nation to default. The future European Stability Mechanism — the eurozone's permanent bailout fund — will start up in 2013.

German opposition politicians have suggested Roesler's main aim was to score political points for his Free Democratic Party, the junior partner in Merkel's center-right coalition, which is struggling with dismal poll ratings.

Roesler defended his position Tuesday.

"We want Greece to stay in the eurozone," he said. "For that, we need to restore (its) economic potential; and from my point of view, there can be no bans on thinking in this restoration."

Greece is relying on rescue loans to remain solvent. But lagging efforts to tame a bloated budget deficit and enforce reforms are threatening that lifeline, which is conditional on fiscal progress.

Athens is trying to convince international creditors that it deserves to get the next, sixth tranche of money due from a bailout fund. Government spokesman Elias Mossialos said late Monday that Greece will get the bailout money.

Despite over 20 months of austerity and two international bailouts each worth about euro110 billion ($150 billion), Greece's finances remain in a parlous state.

Over the past few days, Finance Minister Evangelos Venizelos has issued a series of pledges to accelerate delayed reforms meant to cut the cost and size of the public sector, and raised the prospect of firing up to 20,000 public servants — which would break a major taboo in a country where state employees have guaranteed jobs for life.

In a last desperate bid to plug the revenue hole, the government on Sunday imposed a new, two-year blanket tax on property.

The planned second Greek bailout has faced delays in implementation — not least because of Finland's demand for collateral for its contribution, which annoyed other Europeans.

Merkel said she was "very optimistic" of resolving that.

"I think we want to, and will, find a way that is in principle open to all partners and still fulfills Finland's requirements," she said.

12/9/11 - Black Monday? Markets go into a tailspin as Germany warns of Greece bankruptcy

September 12, 2011 – ATHENS – Germany has stepped up its rhetoric against Greece, warning that the debt-laden country could default on its debts in a move that highlights the growing divisions at the heart of Europe. Philipp Roesler, Germany’s economy minister, said an “orderly default” for Greece could no longer be ruled out and branded the country’s deficit-reduction measures “insufficient.” The warning is likely to spook financial markets further and comes despite Greece yesterday announcing a fresh €2bn (£1.7bn) of budget cuts and the introduction of a country-wide real estate tax. Evangelos Venizelos, the finance minister, said the cuts and tax measure were necessary to allow Greece to meet obligations demanded by the European Union and IMF in exchange for bail-out funds. Writing in the Die Welt newspaper, Mr Roesler said: “To stabilize the euro, we must not take anything off the table in the short run. That includes as a worst-case scenario an orderly default for Greece if the necessary instruments for it are available.” He said such a default would mean “re-establishing the affected state’s ability to function, perhaps with a temporary restriction of its sovereign rights.” Mr Roesler’s comments come as Germany’s Der Spiegel magazine said finance minister Wolfgang Schaeuble had ordered preparations be made for a Greek bankruptcy. The report claimed the German government is preparing for two eventualities under that scenario – Greece staying in the euro or the country exiting and reintroducing the drachma. Despite the speculation, the European Commission said it was sending a team to Athens “in the next few days” tasked with finalising the payment of a new tranche of loans for Greece by the end of the month. G7 finance ministers late on Friday vowed to “take all necessary actions to ensure the resilience of banking systems and financial markets.” However, underlining the difficulties facing German authorities, a survey showed 53pc of Germans oppose further aid for Greece and would not save the country from default should it fail to fulfil loan criteria. -Telegraph

TEL AVIV — Major French banks might be downgraded by Moody’s Investors Service this week because of their exposure to Greek-government debt, media reports say. The Wall Street Journal reported Monday that such downgrades could signal that the debt crisis on the euro zone’s periphery is seeping into the broader regional financial system. Europe’s leaders have been trying unsuccessfully for nearly two years to bring the debt crisis under control, the Journal reported. That’s forced European leaders to consider more tightly integrating the euro zone, even as the public grows more skeptical that that’s the correct course, the Journal reported. -Marketwatch

AUSTRALIA - MORE than $45 billion was wiped from the value of all Australian companies as local investors reacted to turmoil in the European and US markets. In a trading day that went from bad to worse, the S&P/ASX200 index closed down 156.2 points, or 3.72 per cent, at 4038.5, while the broader All Ordinaries index was 152.3 points, or 3.56 per cent, lower at 4125.1. The last time the market dipped to that level was in August, during a week when the S&P/ASX 200 index fell below 4,000 for the first time in a year. This afternoon’s share-market tumble followed on from a sharp drop of 2.5 per cent this morning, as fear gripped investors following weak leads from US stocks and fresh Euro debt concerns. “No one really has any idea where this whole situation may end up,” said IG Markets strategist Ben Potter.  “It’s the threat of contagion that is causing the greatest concern,” he said. “Everyone remembers the early stages of the global financial crisis, where everyone was saying it was contained and there was no chance of it spreading. How wrong they were.” –News.com