It’s Over. European banks will shut their doors.
There is persistent chatter about a Greek default over the weekend, which Greece denied, but the denier refused to be named. If it’s not true, then put your damned name on the statement or be considered what you are – liars. Greece failed to place their short-term bill rollover. That’s a declaration by the market that even for short-term paper the market has utterly lost confidence in Greece and the Euro.
Germany’s DAX market relative to the United States just hit a five year low today.
To add to the “liar liar pants on fire” calls Germany is now reported to be working a plan to recapitalize their banks if Greece defaults. This in turn means three things:
- A Greek default is considered credible by Germany and they are taking official actions related to that possibility. So much for the denials.
- German banks (and presumably French banks and all the other big banks too) are insolvent as they are carrying these bonds at wellabove their actual value in the marketplace. If the bonds were carried at the claimed “loss” values, which is quoted as 50%, then there would be no need to recapitalize them would there? This is an official statement of proof that the banks are lying about asset values and are in factinsolvent.
- Remember that we were just told days ago that these banks were fine and needed no capital and in fact calls for more capital by the IMF were officially refused. The same claim has been made about our banks. You were just told officially by Germany that their claim of adequate capital just days ago was a lie as they are now planning to recapitalize the banks. Do you believe our banks are not similarly exposed and also insolvent? YOU’RE BETTING YOUR FUTURE ON THE BELIEF THAT THEY ARE, SO THIS QUESTION IS QUITE GERMANE AND TIMELY: ARE YOU SURE YOU’RE NOT BEING LIED TO EXACTLY AS WE WERE ABOUT GERMAN BANKS?