Economy

Demeter

(85,373 posts)

71. Banks resist European pressure to buy government debt

Mon Dec 19, 2011, 02:25 PM

Dec 2011

http://www.ifre.com/banks-resist-european-pressure-to-buy-government-debt/1620695.article

Banks are unlikely to come to the aid of debt-ridden eurozone countries, with many planning to ignore political pressure to use cheap money from the European Central Bank to fund purchases of sovereign bonds.

With eurozone governments needing to sell almost €80bn of fresh debt in January alone and bond yields rising by the day, the stand-off between policymakers and banks could turn Europe’s slow-burning debt crisis into a full-scale conflagration in the New Year.

Burned by Greek losses, and under the scrutiny of shareholders, banks have slashed their exposure to weaker European sovereigns over recent months. Senior bankers say they will cut further, despite pressure to use newly available, longer-term ECB loans to buy government debt as part of an officially-sanctioned carry trade.

“When investors are constantly asking what you have on your books and the board is asking you to reduce your exposure, it doesn’t really matter about the economics of the trade,” said the treasurer of one of Europe’s biggest banks. “Am I going to buy Italian bonds? No.”

WELL, YES, THERE IS THAT...

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STOCK MARKET WATCH, Monday, December 19, 2011. [View all] Hugin Dec 2011 OP

Reports this week. Hugin Dec 2011 #1

Why The European Debt Crisis Might Actually Be Over... Ghost Dog Dec 2011 #2

Thanks again for the xpost in LBN, Ghost Dog. Hugin Dec 2011 #3

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fabulous -- i would love to visit the azores.nt xchrom Dec 2011 #75

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The thing is Demeter Dec 2011 #36

ok -- you know something i don't -- where did fuddnik go? xchrom Dec 2011 #40

See WEE Tansy_Gold Dec 2011 #43

well that makes me very unhappy -- i adore fuddnik. xchrom Dec 2011 #49

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Are you running adblock or adban? Sometimes the addons are the problem. TalkingDog Dec 2011 #106

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Well, it's been more than 40 years since I was there, but Tansy_Gold Dec 2011 #56

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Forecast, schmorecast Tansy_Gold Dec 2011 #21

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