Comments on: Europe on the Brink

By: Where We Stand Now « Mr. Unexpectedly

Where We Stand Now « Mr. Unexpectedly — Tue, 21 Jul 2009 01:23:23 +0000

[...] the exact opposite story. Very bad news and analysis, on everything from commercial real estate to European banking instability, is out there every day–today included–and ignored, or at least taken for granted. [...]

By: Carlomagno

Carlomagno — Mon, 20 Jul 2009 12:27:17 +0000

@lukaash: “in the Czech Republic, no homeowner borrowed in Swiss francs or euros.”

According to the latest IMF Article IV report for the Czech Republic, about one in seven loans granted to residents is denominated in foreign currency (I would imagine the EUR and CHF are the most likely candidates, perhaps with a smattering of JPY and USD).

This is low in comparison to other countries in the region, but it is not insignificant.

See table 4 on p. 25 in the following report:
http://www.imf.org/external/pubs/cat/longres.cfm?sk=22878.0

By: Carlomagno

Carlomagno — Mon, 20 Jul 2009 08:59:46 +0000

Two points:

- does the calculation of leverage in these graphs take into account the differences between balance sheet size reported under US GAAP v. IFRS? This is particularly relevant for derivatives, for which US GAAP provides more flexible netting rules (in other words, a bank carrying lots of derivatives on its balance sheet would report a higher leverage ratio under IFRS than under US GAAP).

- quite a few large European banks are mutually-owned and thus do not have any common voting shares. TCE is therefore not the most useful metric to look at the European banking system in general.

By: Weekend Readings « The Mirror Effect

Weekend Readings « The Mirror Effect — Mon, 20 Jul 2009 00:03:39 +0000

[...] Europe on the Brink [...]

By: Simon

Simon — Sun, 19 Jul 2009 22:54:17 +0000

I’ve just started reading a tale of two cities for the second time. When I’ve finished I’m going to try to learn a bit more about the French Revolution.

By: Simon

Simon — Sun, 19 Jul 2009 22:52:17 +0000

@ alfred e I’ll second that. Common man has it right.

By: alfred e

alfred e — Sun, 19 Jul 2009 16:25:39 +0000

@Common. Correct. Well said.

I guess we’re headed right back where we’ve been before.

Les Miserables.

By: lukaaash

lukaaash — Sun, 19 Jul 2009 13:56:56 +0000

Sorry for my rant, but I just had to point this out. The following sentence is not true: “New homeowners in Hungary and the rest of Eastern Europe borrowed in Swiss francs and euros, and as their currencies have collapsed they now find they owe more on their homes than they’re worth.”
And even though I keep reading it not only here, but also in major US and Western European newspapers, that still won’t make it true.
In fact, in the Czech Republic, no homeowner borrowed in Swiss francs or euros. Also, our currency has not collapsed. Sure, many homeowners in Hungary and Poland have in fact borrowed in Swiss francs and euros (and even Japanese yen!), but generalizing this to the rest of Eastern Europe is not only wrong, but absurd and ignorant.
How can I believe anything in the rest of such articles when the information about the area I actually know something about is so unreliable?

By: How the Common Man Sees It

How the Common Man Sees It — Sun, 19 Jul 2009 13:46:47 +0000

All this debt is obviously owed to someone. At some point you have to think that the governments are going to call the richest of these lenders in and start telling them that their new tax is going to be a 20%, 30% and 40% elimination haircut on this burden that they have placed on people. Since the top 5% of the people out there own something like 50% of the world’s wealth I suggest they start with them. This isn’t rocket science. At some point common people are going to start looking for heads to chop….seriously! Who do the wealthy of the world think they are going to go after? When you put a piece of worthless paper above a person’s life and say it has value and must be served and satisfied before the basic needs of people you are bordering on insanity and poking a sleeping giant with a very sharp stick.