Let’s see it’s just after 7:30PM in Dublin so carry the one and Finance Minister Michael Noonan is going to go with NOT ANY TIME SOON. Read more »
Portugal has a long and sordid history of imposing its will on others, so it knows colonialism when it sees it. And all of the strings attached to all of that German money that kept its economy from full-scale collapse? Indubitably imperialistic. Read more »
There will be no third Greek bailout until after Angela Merkel is safely reelected later this month. Once that’s in the bag, though, there’s no time to waste, because the IMF has instituted a very sensible rule for dealing with immediate crises. Read more »
The basic thing about investing in big banks’ unsecured debt is that once upon a time it was a pseudo-risk-free proposition because, like, it’s a bank, what could possibly go wrong,1 and now it’s like,2 hi, you are buying the mezzanine (call it 10-to-30%-loss3) tranche in an actively traded and extremely opaque CDO full of goofy stuff and, hey, put a price on that.
I don’t know who’ll be good at putting a price on that but it stands to reason that Jes Staley, the former head of JPMorgan’s investment bank who left for BlueMountain shortly after several billion dollars of JPMorgan’s money made the same voyage, would. He thinks so anyway:
On a panel at the Bloomberg Hedge Funds Summit in New York, Mr. Staley discussed what is known as resolution authority, in which regulators help wind down failing banks. The process of adapting to these new rules, he said, would give banks a “more clearly defined capital structure,” and thereby create opportunities for investors.
“There’s going to be tremendous mis-pricing between the different levels of the capital structure in these banks,” Mr. Staley, who is known as Jes, said on the panel.
One imagines that, if all goes according to plan, then at some point between now and the end of time:
- There will be some bank debt (deposits!) that is bail-outable and more or less government guaranteed;
- There will be some other bank debt (repo!) that is collateralized and more or less money-good, ish;
- There will be some other other bank debt that is bail-inable and more or less clearly mezzaniney and going to be toasted in any bank failure; and
- People will believe that.
Once, in 2007, the people who ran RBS though it would be a good idea to buy a Dutch bank with lots and lots of toxic assets. It proved to be not so good an idea, so RBS needed to raise some cash. So it sold £12 billion worth of new stock in June 2008.
In the face of a £28 billion net loss it announced a few months later, that fresh capital evaporated rather quickly, forcing a new share sale to Her Majesty’s Treasury. The people who bought those £12 billion in shares, unsurprisingly, aren’t thrilled about what happened to the value of those shares before and after nationalization. So 12,000+ are suing, seeking several billion pounds from Fred Goodwin & Co., which makes the loss of his knighthood seem rather a bargain. Read more »
Things in Cyprus: kinda bad. There are better places than here to read about it; I particularly recommend Joseph Cotterill here and here, pseudo-Paweł Morski here and here, Mohammed El-Erian here, the FT’s coverage here and here, the Journal’s round-up of analyst reaction here, etc.
The basic story is that Cyprus’s government and banks are both massively overindebted and need a bailout, and the EU and IMF will provide a €10bn bailout, but they demanded that Cyprus chip in some €7bn, which it has decided to do by means of a tax on deposits in Cypriot banks of 6.75% for up to €100,000 and 9.9% above €100,000. (Is that rate on bigger deposits marginal or absolute? No one knows!) Those numbers are being renegotiated and may end up not being approved by Cyprus’s parliament.