Friday, June 24, 2011

Is It All About Saving The Banks? Or Saving Face?

Is it all this talk about bailouts just about saving the big banks? The Bank of England said today that teuro-area debt crisis "poses the biggest risk to the stability of the U.K. financial system and banks should build up capital when earnings are strong",

It's the same about giving more money to Greece so that the bond holders don't lose money, at least not the executives sitting on their current mandate. Does anyone think Greece will pay its debt, with or without "austerity" measures?

“The committee judged that sovereign and banking sector strains in some vulnerable euro-area economies were the most material and immediate threat,” "U.K. banks’ “direct exposures to vulnerable euro- area sovereigns were limited, but they had larger claims on the private sectors of some of those economies.”

European Central Bank President Jean-Claude Trichet also said this week that the most serious threat to financial stability in the European Union was the mounting debt crisis.

"... strains in the euro region pose a risk to Britain’s lenders, because U.K. banks’ combined claims on France and Germany account for about 130 percent of their so-called core Tier 1 capital, with close to half of that representing claims on banks".

“Any escalation of stresses could also be transmitted via interconnected global markets, including via the U.S., leading to a tightening of bank funding conditions,”  “Such contagion could be amplified if bank creditors were unsure about the resilience of their

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