If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(New Europe)   Commission approves a €3.9 billion recapitalisation of Italy's third largest bank. Because this time it will surely fix Europe's banking system, we swear. Why are you laughing?   (neurope.eu) divider line 23
    More: Spiffy, Commission, Europe, Italy, bankers, Commission approves, capital ratios, eu states  
•       •       •

637 clicks; posted to Main » on 18 Dec 2012 at 10:22 AM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



23 Comments   (+0 »)
   
View Voting Results: Smartest and Funniest

Archived thread
 
2012-12-18 10:23:32 AM  
Better to do nothing at all and let the free market sort it out.
 
2012-12-18 10:29:20 AM  
The funny thing is that the USA and Canada use the same basic European banking model. It is only a matter of time until these recurrent problems hit us in North America. The US is still insulated because right now people are willing to buy the debt but that is going to end pretty soon and then it is likely that the world economy will fail and we will have to start from scratch.
 
2012-12-18 10:33:25 AM  

chumboobler: The US is still insulated because right now people are willing to buy the debt but that is going to end pretty soon and then it is likely that the world economy will fail and we will have to start from scratch.


Why?
 
2012-12-18 10:34:44 AM  
Because our credit history says we are a bad risk.
 
2012-12-18 10:43:24 AM  

qorkfiend: chumboobler: The US is still insulated because right now people are willing to buy the debt but that is going to end pretty soon and then it is likely that the world economy will fail and we will have to start from scratch.

Why?


Because he hasn't been stocking up on gold for nothing dammit!
 
2012-12-18 10:54:09 AM  

qorkfiend: chumboobler: The US is still insulated because right now people are willing to buy the debt but that is going to end pretty soon and then it is likely that the world economy will fail and we will have to start from scratch.

Why?


Because eventually the world will see US bonds as a bad investment. Once the US has its credit rating lowered due to the Debt to GDP ratio it will be the beginning of the end. The US already has amassed a debt that is unmanageable. Eventually confidence in the US dollar will be lost. Even now, the Canadian dollar regularly has greater value than the US dollar. That is not because Canada's economy is getting stronger, it is because the US economy is getting weaker faster than Canada.
 
2012-12-18 10:58:14 AM  
I dunno, 3.9 billion eu probably seems like a lot of money, but in the world of banking it's really not all that much. I work for a much smaller bank and we have no problem raising investments in the hundreds of millions whenever we feel like cash on hand is getting low.
 
2012-12-18 11:18:55 AM  
Your chances of re-capitalization?

-0-
 
2012-12-18 11:45:11 AM  

chumboobler: Because eventually the world will see US bonds as a bad investment.


Why?

chumboobler: Once the US has its credit rating lowered due to the Debt to GDP ratio it will be the beginning of the end.


Wrong.

chumboobler: The US already has amassed a debt that is unmanageable.


Also wrong. We've had higher debt-to-GDP ratios in the past.

chumboobler: Eventually confidence in the US dollar will be lost.


How?

chumboobler: Even now, the Canadian dollar regularly has greater value than the US dollar. That is not because Canada's economy is getting stronger, it is because the US economy is getting weaker faster than Canada.


If this was true, the US dollar would be dropping relative to the Canadian dollar, instead of holding steady. It's almost as if two similar nations who happen to be next to each other will eventually reach economic parity.
 
2012-12-18 11:49:53 AM  

chumboobler: The US already has amassed a debt that is unmanageable. Eventually confidence in the US dollar will be lost. Even now, the Canadian dollar regularly has greater value than the US dollar. That is not because Canada's economy is getting stronger, it is because the US economy is getting weaker faster than Canada.


Um, OK, given you've very clearly shown you have no idea how this works, time to stop typing and pay attention.

Value of debt and value of currency are two different things. The confidence others have in the US debt is reflected on how much the US pays to sell it -- in other words, the interest rate. Which, last I checked, 10-year bonds sell for about 1.7%. That means when push comes to shove, investors really don't believe in any sort of hyperinflation risk or they'd demand higher rates now. Yes I'm aware of allegations that they're "gaming" the system, but it's their system so I'm not sure what the point is. The Fed can buy all the bonds it wants, but in the end other people buy the debt and they wouldn't do so at artificially high prices. The Chicken Littles also scream about how China owns all our debt. Setting aside the fact that they don't, frankly foreign debt is a good sign that we have strong credit. Actually they do it to manipulate exchange rates, but consider that they're buying paper in exchange for real goods. Other nations would gladly be so lucky. If they really thought it'd be throwing good money after bad they'd look elsewhere. Instead, investors domestic and abroad have ridiculously high confidence in America's credit. They say they don't because America is a culture that rewards whiners. The reason why dollars are cheap is because that's the Fed's only real means of stimulus as long as Americans keep electing politicians who campaign on obstructionism. We can't get a jobs program going, so we devalue the dollar to get people to spend them. It kinda works in a passive sort of way, like building a giant sail to move your car because you're out of gas and refuse to refuel out of some ideological principle, but that's all the political power they have.
 
2012-12-18 12:13:50 PM  
Clearly I am an idiot

http://useconomy.about.com/od/fiscalpolicy/p/US_Debt.htm
 
2012-12-18 12:35:02 PM  

chumboobler: Clearly I am an idiot


By posting a citation you don't understand, yeah. From your very source:

a growing Federal debt is like driving with the emergency brake on, further slowing the U.S. economy. That's because debt holders want larger interest payments to compensate for what they perceive as an increasing risk that they won't be repaid. This added interest payment expense usually forces a government to keep debt within reasonable limits.

In other words, "reasonable" is not some arbitrary number; it's defined by the interest rate. If the debt is "unreasonable", the rate MUST go up. The 10-year Treasury is currently, AFTER issuing all that new debt, at 1.7%.
 
2012-12-18 01:16:01 PM  

dragonchild: We can't get a jobs program going,


Going strong until here. Jobs programs don't work.
 
2012-12-18 01:43:08 PM  

YixilTesiphon: Jobs programs don't work.


Of course they work; the question is whether or not they work for you, which is largely a matter of what your priorities are. If you need 3% annual GDP growth to get an erection, yeah, a jobs program is going to disappoint you. Personally, I see economics as a means to social ends. If that means I'm willing to consider ideologically "impure" options because they'll achieve my goals, then feel free to mark me a commie pinko. For what it's worth, my ideas are pretty harmless as Congress is adamantly against a jobs program anyway.
 
2012-12-18 03:03:01 PM  
How did a story about Italian banks become a whine about US jobs?
 
2012-12-18 05:49:18 PM  
The transition from capitalism to socialism is not going to be quick & easy. The old banking system isn't just going to lie down & die without a fight, either. So it must be killed off slowly & painfully. Public faith in them must be eroded away until people finally see them as the complete failures that they truly have become. Only then will Europe be ready to make those final steps & do away with the old system in it's entirety.
 
2012-12-19 01:37:43 AM  

opiumpoopy: How did a story about Italian banks become a whine about US jobs?


Isn't EVERYTHING about us?
 
2012-12-19 02:11:02 AM  

chumboobler: Clearly I am an idiot

http://useconomy.about.com/od/fiscalpolicy/p/US_Debt.htm


qzprod.files.wordpress.com

Yes, you are...
 
2012-12-19 04:08:51 AM  

opiumpoopy: How did a story about Italian banks become a whine about US jobs?


Interesting that no one's mentioned that 3.9 billion euros isn't a lot of money - it's about $5.15 billion, about 1/2 of Bill Gates' net worth. Italy's 2011 GDP was $1.85 trillion, so this is about 1/3 of 1% of GDP to keep a major bank in operation.

Clearly this signals the utter collapse of Italy, chumboobler is correct, and Romans will soon begin to crack open each other's skulls to feast on the goo inside.
 
2012-12-19 05:52:51 AM  

El Pachuco: opiumpoopy: How did a story about Italian banks become a whine about US jobs?

Interesting that no one's mentioned that 3.9 billion euros isn't a lot of money - it's about $5.15 billion, about 1/2 of Bill Gates' net worth. Italy's 2011 GDP was $1.85 trillion, so this is about 1/3 of 1% of GDP to keep a major bank in operation.

Clearly this signals the utter collapse of Italy, chumboobler is correct, and Romans will soon begin to crack open each other's skulls to feast on the goo inside.



Derp... I said it wasn't that much money.
 
2012-12-19 06:22:09 AM  
Looks like chumboobler has watched Money is Debt a few too many times.
 
2012-12-19 06:45:03 AM  

chumboobler: Even now, the Canadian dollar regularly has greater value than the US dollar. That is not because Canada's economy is getting stronger, it is because the US economy is getting weaker faster than Canada.


That's not what's happening.

The Bank of Canada has a vested interest in keeping the Canadian dollar at par or less valuable than the American dollar since 80% of Canada's trade is with the US. So the loonie is pegged to the greenback and every time there is a currency fluctuation the BoC artificially inflates the Canadian dollar for the sake of exports. The American dollar will never get lower than Canada because Canada won't let it. It's currently being propped up by "Canadiflation".

Canadian economists have warned against such a tenuous economic policy for decades but Canada really has no choice. If the USD goes south, trade dries up and the Canadian economy grinds to a halt. Ever since the financial crisis, however, Canadian economic leaders have sought ways to untether the Canadian economy from the Yankee beast and diversify trade pacts. China and India receive a fair number of Canadian exports now than ever before.

Oh, and Canadian banks are nothing like American or European banks. There are more regulations and lower leveraging power than elsewhere and these sound, controlled policies have enabled Canada to withstand the financial crisis virtually unscathed, with not a single bank failure or mishap. While it helped some, it's still not preventing Canada from being pulled into the maelstrom down south. It's predicted that the next few years are going to be extremely rocky -- Canada will eventually join the global Great Recession, it'll just be a little late in doing so.
 
2012-12-19 11:29:18 AM  

TwistedFark: Derp... I said it wasn't that much money.


muchmorethanmommy.files.wordpress.com
 
Displayed 23 of 23 comments

View Voting Results: Smartest and Funniest


This thread is archived, and closed to new comments.

Continue Farking
Submit a Link »
On Twitter





In Other Media


  1. Links are submitted by members of the Fark community.

  2. When community members submit a link, they also write a custom headline for the story.

  3. Other Farkers comment on the links. This is the number of comments. Click here to read them.

  4. Click here to submit a link.

Report