Posted on 11/16/2011 12:49:41 PM PST by blam
MUST-READ: Citi's Willem Buiter Says Europe Could Just Have Weeks Or Days Before A Financial Catastrophe
Joe Weisenthal
Nov. 16, 2011, 3:17 PM
This is a fantastic interview with Citi's Willem Buiter on Bloomberg TV.
You can hear the anger in his voice as he argues that Europe may have a matter of days before an unnecessary default and a financial catastrophe.
The answer: the ECB must act fast, and ignore the Germans who don't get it. While some people don't think that the ECB can really monetize sovereign debt this way, Buiter believes there's absolutely nothing preventing the ECB from doing whatever it wants on the secondary market.
This summary of the key points and quotes was provided to us by Bloomberg TV. You can watch the full video here.
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Buiter on Europe's crisis:
"Time is running out fast. I think we have maybe a few months -- it could be weeks, it could be days -- before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it. So they have to act now."
"The only two guns in town, one is only theoretical, and that is increasing the size of the EFSF to 3 trillion. It should happen but it can't for political reasons. The other one, the only remaining share is the ECB. They may have to hold their noses while they do it, and if they don't do it, it's the end of the euro zone."
On why the ECB hasn't acted yet:
"Because after the error of the Bundesbank, they consider central banks purchasing sovereign debt outright to be like swearing in church. It's just not done.
(snip)
(Excerpt) Read more at businessinsider.com ...
translation: I have very heavily leveraged Citi in Europe. Please please PLEASE bail me...uh, er....them out, before it’s too late!
You Freepers need to be concerned because my sorry bank has long gone from "too big to fail" to "too big to bail."
Is this what happened to the DJIA at about 3:00PM EST?
Could be the rumor of the day, or ...
Personally, I'm waiting for the big bust which can come at any minute ... literally.
Given that we have a total U.S. economy worth an estimated $15 trillion ... in hock to outstanding debt of $15 trillion, another $150 trillion or so of "off balance sheet contingent liabilities," another $1300 or so of derivative exposure, PLUS bubbles in real estate, student loans, personal credit, and medical care costs that have yet to deflate ... well ... you can expect the markets to blow up any time over just about anything.
You just don’t understand the creative new economy! lol
What do you think is going on, Blam? I don’t trust myself to discern this stuff anymore - I’ve become permanently pessimistic.
“Because after the error of the Bundesbank, they consider central banks purchasing sovereign debt outright to be like swearing in church. It’s just not done.”
But i thought the Fed was smart for buying up most of the new US Bond issues?
If those are ‘Lockerbie bomber’ days or weeks, then no one should be worried.
If you wish to understand why Europe is so screwed, you need only ponder that the head of the European Central Bank is Italian, and that the Pope is German.
What do you think is going on, Blam? I don’t trust myself to discern this stuff anymore - I’ve become permanently pessimistic.
I'm convinced that TS(will)HTF at some point. When? I don't know..
Seems everyone was grinning last week with the DOW up. I’m afraid it is all smoke and mirrors though. I don’t see how our own debt problems get fixed, let alone the disfunctional mess in the EU.
In response to your other post: No, I’m not ready. Mentally, physically or finacially. Better take care of the things I can.
What will people do without the damned stupid show dancing with the stars?
Fine. If they put it out there, and the Chinese don't salute it, the EU is a dead DEUstchen duck.
During the last Depression, movies boomed because people needed some break from the anxiety. They would have talent shows at intermission, which was that era’s version of Idol. They would also give away dishes, the now famous Depression Glass, which was also available in laundry soap boxes.
People today may not sub to cable or sat TV, but they can buy a streaming device or watch online or watch on DVD. For all we know, the government may subsidize Hollywood in the name of National Morale.
From what I have been able to glean, the Argentinian version of all those reality shows and soaps have continued, post-collapse. People in the poorest places will even fabricate illegal hookups to electricity and cable and buy TVs that fell off a truck, just to have that precious time of escape.
Just go to the Daily Mail and quickly browse the extreme right-hand column. Nothing but trivia about celebrities and sports stars. Obviously, people will always consume that sort of tripe.
I have seen numbers that are all over the place with respect to future U.S. liabilities. The Cato Institute recently estimated that it is over 120 trillion. Others get much higher totals by throwing in ObamaCare, off balance sheet projects (where present and future spending is counted as an "investment" rather than an outlay), NGO obligations (e.g. Fanny, Freddy, FDIC, etc.), bank bailouts, etc.
Then, you have to consider the more than $1300 trillion in derivative exposure, 95 percent of which is held by U.S. banks.
I picked a number that is sort of in the middle of the more respected estimates, but will be the first to admit that nobody really knows what the total slice really is.
Any you cut it, however, the original point stands. We are completely, totally an utterly broke.
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