19 August 2019
Some very interesting and alarming news emerged last week about the Eurozone, but do we hear much about it in the UK?
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It seems that European banks are suffering a bit of a share price melt-down at the moment, with their prices falling to near 1980s levels.
And a Reuters report from last Thursday says that a combination of negative interest rates, – something I’ve talked about before – falling bond yields, more red tape and the increasing likelihood of a recession has “wiped out most of the value of European banks” and that their shares are “now at meltdown prices approaching the days of the Berlin Wall”.
It goes on to say that those banks are now worth about the same as when Greece, Ireland and Portugal were queueing up for bailouts.
The upshot is that the wider banking sector for the Eurozone is worth about half a trillion dollars, or as Reuters points out, about half the size of Microsoft as well as now being only one third the size of US banks.
In fact, Reuters says that Eurozone banks have lost 84% of their value since 2007.
And this will hit growth in the Eurozone, as it makes it harder for banks to raise the money needed to then loan it out to businesses for expansion.
The article goes on to say that European Companies looking for finance will be forced to raise it on the markets, or borrow from foreign banks.
And this will not be helped by news out today that inflation in the Eurozone is just one percent, actually 0.9% if you look at the core rate that excludes volatile goods.
And this is the lowest inflation rate since the middle of 2016.
Further, the Bundesbank has warned that the German economy could shrink again in the third quarter of 2019, so putting into a technical recession.
This all points to the European Central Bank (ECB) having to tweak its interest rates down further next month and buy more bonds in an effort to stimulate the economy.
Alex Rankine in Money Week reports that because of the negative interest rates imposed on banks for overnight deposits, Eurozone banks have paid 21 billion euros to the ECB since 2014. The current rate is minus 0.4% and some expect this to go to minus 0.6% next month putting more of a squeeze on the Eurozone banks.
And that could force the banks affected into a vicious negative feedback loop.
Chen Gong writes in the Brussels Times that:
“The recent frequent layoffs in the European banking industry have highlighted its vulnerability in the post-crisis era, and in the context of global trade war and economic slowdown, this vulnerability may eventually evolve into a trigger for a new global economic crisis.”
I personally do not see the Eurozone or wider EU surviving a blow of that size.
And the Remainers want us to wait around still shackled to the EU until this happens?
I got this info from five sources: Reuters, Market Watch, the Brussels Times, Money Week and the Washington Post, and none of them mention Brexit at all in this context. So I can only conclude that it’s purely a Eurozone problem.
And, if UK Remainers can take what they see as the expert opinions of the Brexit Project Fear merchants at face value – then, shouldn’t they also heed these warnings?
The big difference is that the Project Fear reports are based on a 12 month old report – the ones I cite are much more recent.
#Brexit #EuroZone #GlobalEconomicCrisis
https://uk.reuters.com/article/uk-eur… https://www.washingtonpost.com/busine… https://www.marketwatch.com/story/eur… https://moneyweek.com/513130/the-thre… https://www.brusselstimes.com/opinion…
The UK needs to get out of the EU ASAP in order to avoid ending on the hook to bail out the European Banks. I suggest the remainers should buy European Bank shares using their own personal wealth to demonstrate their commitment to the EU and the great project.
Ian The Bastard
I can’t pretend to fully understand the European Banking system, although it’s been fairly clear for some time that the Deutsche Bank is in desperate trouble, the reason MSM don’t highlight the problems is even clearer, if we stay in the EU we will be bailing them out.
BEWARE the Bank Bail In Scheme. They can clean out your account to shore themselves up.
Deutche Bank is completely bankrupt, Three of Italy’s top banks have already collapsed, Soc Gen in France is struggling like crazy. This list goes on and on.
Farmer ned 6
The Euro is propped up by the £ and the BoE guaranteed – May’s “Deal” makes us still liable to support the Eurozone – NO DEAL NOW!!!
Shhh! Closely guarded secret by UK media and remainers. If we are crazy enough to stay after October 31st guess who will be baling them out – we will. It is high time our new Government started to act to get this sort of information out to the UK citizens, along with the positive aspects of the Brexit decision, to offset the remainers out of date media leaks. We should be launching a Back Britain campaign NOW, not sitting back letting the likes of Jeremy Corbyn grab the news headlines with his so called initiatives. Also let’s take the long awaited step of confirming that Robin Tilbrook’s assessment of the legal position (that we left in March) is correct, that the legal default if a deal cannot be agreed is leaving without a deal (voted for by our MP’s who have developed very short memories, and let’s get out into the real world and leave the EU to its failed project.
Funny how all the mainstream media is harping on about potential rationing and the apparent no deal disaster. But completely fail in mentioning the EU being on the brink of a recession and insolvent banks. But remainers are still blind to this reality.
With any luck, just as the E.U ship disappears below the surface, we are out of it! Remoaners are campaigning for this kind of life, an economy that relies on pumping billions of taxpayers money into a central pot and it being doled out to the most corrupt and undeserving countries within that group and banks who don’t give a toss about the man or woman in the street, you’re welcome to it you fools!!!