By some
measures, "the stresses on the European
financial system are approaching or even exceeding levels last seen after the
bankruptcy of Lehman Brothers in September 2008." For example, market perception of the risk
that "two large banks in the euro area
could very well fail in the next year" has surpassed the previous peak
in 2009, according to the ECB's Financial Stability Review.
The
transmission of tensions among sovereigns, across banks and between the two
intensified to take on "systemic crisis
proportions not witnessed since the collapse of Lehman Brothers three years
ago," the report said.
But the ECB deliberately
avoided discussing the one risk that most heavily weighs on many investors,
economists and political leaders, i.e. "the possibility that the Eurozone could
break up."
A
teleconference among E.U. finance ministers ended Monday with an agreement by Eurozone
nations to contribute around $195 billion, through the I.M.F., to aid the
banks. So once again, taxpayers will be
forced to come to the aid of banksters.
"Several negative developments are
converging to raise tensions even higher than they already are," the ECB said
in its report. "In the first three months of 2012 banks will need to roll over more
than 200 billion euros in debt at the same time that governments and corporations
also have unusually high financing needs.
Yet investors have become pessimistic about Europe, and the market
for bonds issued by banks is nearly lifeless." (Emphasis added)
Credit
crunches are already visible in some countries like Ireland. Meanwhile, "slower economic growth, which could become a recession, is likely to
lead to an increase in bad loans, which will further weaken lenders."
The ECB disclosed
Monday that it spent 3.4 billion euros intervening in bond markets last week, a big
increase from the previous week but still far short of the massive intervention
that some economists and elected officials would like to see.
ECB pressure
continues to be put on political leaders to swiftly deploy measures they have
agreed on, to contain the crisis.
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