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Crisis Awaits World’s Banks as Trillions Come Due (And You think we've got problems?)
New York Times ^ | 07/11/2010 | Jack Ewing

Posted on 07/11/2010 7:34:09 PM PDT by SeekAndFind

FRANKFURT — The sovereign debt crisis would seem to create worry enough for European banks, but there is another gathering threat that has not garnered as much notice: the trillions of dollars in short-term borrowing that institutions around the world must repay or roll over in the next two years.

The European Central Bank, the Bank of England and the International Monetary Fund have all recently warned of a looming crunch, especially in Europe, where banks have enough trouble raising money as it is.

Their concern is that banks hungry for refinancing will compete with governments — which also must roll over huge sums — for the bond market’s favor. As a result, credit for business and consumers could become more costly and scarce, with unpleasant consequences for economic growth.

“There is a cliff we are racing toward — it’s huge,” said Richard Barwell, an economist at Royal Bank of Scotland and formerly a senior economist at the Bank of England, Britain’s central bank. “No one seems to be talking about it that much.” But, he added, “it’s of first-order importance for lending and output.”

Banks worldwide owe nearly $5 trillion to bondholders and other creditors that will come due through 2012, according to estimates by the Bank for International Settlements. About $2.6 trillion of the liabilities are in Europe.

U.S. banks must refinance about $1.3 trillion through 2012. While that sum is nothing to scoff at, analysts seem most concerned about Europe because the banking system there is already weighed down by the sovereign debt crisis.

How banks will come up with the money is an open question.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; News/Current Events
KEYWORDS: awaits; bank; banks; come; crisis; debt; due; europe; trillion; trillions; world; worlds

1 posted on 07/11/2010 7:34:13 PM PDT by SeekAndFind
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To: SeekAndFind

Not to worry, the Obamasiah will bail them out.


2 posted on 07/11/2010 7:36:27 PM PDT by Jim Robinson (JUST VOTE THEM OUT! teapartyexpress.org)
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To: SeekAndFind

2011 will probably be a very bad year, followed by a worse 2012. I hope I’m wrong.


3 posted on 07/11/2010 7:38:15 PM PDT by unkus
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To: SeekAndFind

The BIS says that under their shorter adopted maturity rate adjustment, the world has about $700 trillion in credit derivatives (probably something like the rollovers due for one or two years instead of 2-4 years conceptually). At short term financing at 1%, the rollovers will cost $7 trillion...nobody has it.

The unwinding of credit derivatives at all levels exceeds the world’s ability to pay the rollover fees, and the capability of bailouts has been exceeded...debt (money) must be printed. We know where that leads....inexorably.


4 posted on 07/11/2010 7:39:10 PM PDT by givemELL (Does Taiwan eet the Criteria to Qualify as an "Overseas Territory of the United States"? by Richar)
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To: givemELL

It leads us to revolutions, unrest, wars, unemployment, mass migrations of populations.....?


5 posted on 07/11/2010 7:42:04 PM PDT by Thumper1960 (A modern so-called "Conservative" is a shadow of a wisp of a vertebrate human being.)
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To: SeekAndFind

Why do I suspect some backdoor, secretive deal will be made by the Federal Reserve to fund all these liabilities?

Our treasury is being raided and our children indentured, here. Not just children, grandchildren.

This is premeditated. Bye-bye United States and the dollar as world reserve currency. What will replace it will be to our distinct disadvantage, by design.


6 posted on 07/11/2010 7:44:06 PM PDT by RegulatorCountry
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To: SeekAndFind

those crazy Mayans might be on to something..12/21/12


7 posted on 07/11/2010 7:46:33 PM PDT by eak3
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To: Thumper1960
mass migrations of populations.....?

From where to where ? This is a world problem...
8 posted on 07/11/2010 7:46:49 PM PDT by SeekAndFind
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To: SeekAndFind

People will move to where they perceive conditions to be better than where they’re leaving. Reason has little to do with it.


9 posted on 07/11/2010 7:49:12 PM PDT by Thumper1960 (A modern so-called "Conservative" is a shadow of a wisp of a vertebrate human being.)
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To: givemELL
At short term financing at 1%, the rollovers will cost $7 trillion...nobody has it.

The unwinding of credit derivatives at all levels exceeds the world’s ability to pay the rollover fees, and the capability of bailouts has been exceeded...debt (money) must be printed. We know where that leads....inexorably.

The nations of the world have it so long as everybody pretends to have it. It's not as if physical printing presses have to be fired up any more, and it's not as if the flood of currency fiction has to spill over into the "real" economy. We've been doing it ourselves for over two years now.

Sooner or later, though, some nation is going to stop going along to get along, and then the wheels will fall off in very short order. Look for a major sovereign default and then chaos. It could be years if the smoke and mirrors hold, or it could be next week.

10 posted on 07/11/2010 7:49:19 PM PDT by RegulatorCountry
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To: SeekAndFind

The NY Times is pushing hard for massive Quantitative Easing on a scale that dwarfs 2007-2009.

Why?!

Because such massive spending would delay the onset of the symptoms from too much debt (e.g. deflation).

Of course, such massive spending would also make the future problem even worse, but that doesn’t matter to the NY Times...who is more concerned with keeping Democrats in power than in our long term economic health.


11 posted on 07/11/2010 7:49:40 PM PDT by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: givemELL
The BIS says that under their shorter adopted maturity rate adjustment, the world has about $700 trillion in credit derivatives (probably something like the rollovers due for one or two years instead of 2-4 years conceptually). At short term financing at 1%, the rollovers will cost $7 trillion...nobody has it.

Since derivatives aren't debt, why does short term financing at 1% mean anyone owes $7 trillion?

The unwinding of credit derivatives at all levels exceeds the world’s ability to pay the rollover fees

Then it's good that they don't have rollover fees.

12 posted on 07/11/2010 7:55:21 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

Good time to put all your investments/money in Canadian Equity Funds. Canadian banks are safe and Canadian Equity is even safer


13 posted on 07/11/2010 7:56:59 PM PDT by celtictomcat
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To: unkus

You are not incorrect....


14 posted on 07/11/2010 8:11:42 PM PDT by misterrob (Thug Life....now showing at a White House near you....)
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To: celtictomcat
...Good time to put all your investments/money in Canadian Equity Funds...

Hmmm...looks like you're right:

http://mutualfunds.yahoo.ca/p/top/ab1.html

15 posted on 07/11/2010 8:31:16 PM PDT by FReepaholic (The problem is they do not fear us.)
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To: SeekAndFind

regresar a Mexico


16 posted on 07/11/2010 8:32:59 PM PDT by nkycincinnatikid
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To: SeekAndFind
"Their concern is that banks hungry for refinancing will compete with governments"

Ahh, now there's the basic problem - assuming that government is naturally entitled to come first and foremost in the capital markets, and that those danged capitalists, well they can just cool their heels at the back of the bus until government has finished feeding at the trough.

No, the real, legitimate, concern is not that banks will be competing with government, but that government is competing with private industry, including banks, and is stealing all the oxygen in the room by soaking up all of the capital private businesses need to start investing in their businesses and thereby increasing their hiring.


17 posted on 07/11/2010 8:37:23 PM PDT by Oceander (The Price of Freedom is Eternal Vigilance -- Thos. Jefferson)
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To: Jim Robinson

This, and only this, is the reason why the IMF recently chided Obammie and his Commies for their reckless spending.

Since the US dollar is the lion share of the backing of the SDRs, they need a strong US dollar to give away to other nations.

We all know that they want the US dollar to crash and burn. But we also know that they want to control that crash so that it occurs in synch with it being replaced with a global currency.

Timing is everything.


18 posted on 07/11/2010 8:52:39 PM PDT by Ghost of Philip Marlowe (Prepare for survival.)
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To: SeekAndFind

I never realized there was so much money in the world with everyone owing something to everyone else. Maybe the world just needs an economic reset, just like in the Bible days. LOL


19 posted on 07/11/2010 8:53:18 PM PDT by DonaldC (A nation cannot stand in the absence of religious principle.)
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To: SeekAndFind

I wonder if it would actually be a good idea for a conservative to win the presidency in 2012. After all who the heck wants to be president when the big crash comes???


20 posted on 07/11/2010 9:21:30 PM PDT by ColdSteelTalon (Light is fading to shadow, and casting its shroud over all we have known...)
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To: DonaldC
we battle not against flesh and blood but against principalities and powers in high places, the world is being setup for everyone to buy or sell via some global economic monetary distribution.

obama and his nobel prize winning stooges are eagerly knocking over the remaining walls that have held back the tide,

our elected leaders now hate the constitutional and economic freedoms and military capability that have stood as a beachhead against these days.

21 posted on 07/11/2010 9:38:20 PM PDT by captmar-vell
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To: RegulatorCountry

“Why do I suspect some backdoor, secretive deal will be made by the Federal Reserve to fund all these liabilities?”

I have the same suspicions. If certain companies are “too big to fail” then for sure we will bail out a country or two, on the backs of our children. I am sure the U.N. will demand it.

Obama and his misfits will think this will endear the other nations to us.

It won’t.

Giving foreign countries money, no matter which president does it, has never lead to any meaningful relationship, with one exception, Israel, in my opinion.

The more you throw at these welfare whores (be it people or countries) the trend shows the more likely that they will feel entitled.

If the US goes any deeper, and say these countries were in sound financial shape, they would be doing their best to take us down.

As it was, when our depression was first announced, I was flabbergasted by the comments on other blogs from Canadians, Brits, Spanish, Greeks, everyone that basically said “FU America!” They thought they had the upper hand, that it wouldn’t happen to them. Many of the comment posters were Euro socialists I’m sure, which means they were over-educated to the point of being stupid, and couldn’t fathom that their economy was tied to ours.

Many in the world hate us, not because of what the dems painted as “cowboy politics” but for the exact opposite reason, we were cowards. Buying off friends and allies. We were no longer leaders, we were just a cookie jar, and we weren’t giving them enough cookies.


22 posted on 07/11/2010 10:47:56 PM PDT by esoxmagnum
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To: DonaldC

“Maybe the world just needs an economic reset, just like in the Bible days. LOL”

Let’s declare a year of Jubilee!


23 posted on 07/11/2010 11:00:20 PM PDT by Persevero (Homeschooling for Excellence since 1992)
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To: SeekAndFind
"From where to where ? This is a world problem..."

For quite some time I've been trying to envision what would happen if a million of Africans driven, say, by drought, were to embark in small boats towards the southern shores if Europe. Would the have the resolve and the means to stop such a flotilla?

Envision also 100,000,000 Chinese, less than 10% of the population, migrating into the presently Russian Siberia. The Soviet regime would nuke them without hesitation, but what would happen in the present-day world?

24 posted on 07/12/2010 2:59:59 AM PDT by TopQuark
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To: givemELL

$700 trillion is $100,000 per person on earth; somehow I don’t get the concept of the balance sheet there. It has to be that as I’m taking wheelbarrows full of money out my front door over to my neighbor, he’s bringing sacks full of money in my back door , doesn’t it?


25 posted on 07/12/2010 4:02:07 AM PDT by gusopol3
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To: gusopol3

He’s been whining about derivatives, without knowing what he’s talking about, for years.


26 posted on 07/12/2010 5:53:36 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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