Europe's money markets freeze as crisis escalates in Italy and Spain

[dixiegrrrrl]

The European money markets have begun to seize up as pressure mounts on the Italian and Spanish banking systems, tracking the pattern seen during the build-up towards the financial crisis in 2008.

"Europe's money markets are undoubtedly starting to freeze up," said Marc Ostwald from Monument Securites.

"It's not as dramatic as pre-Lehman but it is alarming and shows the pervasive degree of fear in the markets. People are again refusing to lend except on a secured basis."

The credit stress was triggered by fresh mayhem in the southern European bond markets and ominously in parts of the eurozone's soft core as well, including Belgium. Spanish yields pushed further into the danger zone to 6.42pc. Italian debt reached a post-EMU high of 6.22pc before falling back slightly on reports of Chinese buying.

http://www.telegraph.co.uk/finance/financialcrisis/8677989/Europes-money-markets-freeze-as-crisis-escalates-in-Italy-and-Spain.html

[RKP5637]

1. The article calls it "pervasive degree of fear in the markets." I call it not

fear, but good common sense. I'm wondering about the ripple effect here, we sure are in a leaky boat too.

[dixiegrrrrl]

2. think: deja vu. 2008.

But faster.

[RKP5637]

3. Yep, that's what I think too, it will come quickly. PS: Remember all the

leaks about the secret congressional meeting on declaring martial law, and the discussions/presentations on You Tube. I showed that to a number of people, and all I got was a deer in the headlight look.

I just don't think many get how close to the edge we're treading. Based on the recent performance of this congress, I sure wouldn't want them to have to do much heavy thinking in a depression.

[dixiegrrrrl]

5. 3 kinds of people in the world:

Those who can see what is going to happen
those who can see what IS happening
and the majority, who ask " what the hell happened"?

[RKP5637]

6. Yep, that's why I hang out on DU, the first 2 kinds of people. I always find

DU ahead of the herd.

[roamer65]

4. This is exactly how the Great Depression played out.

1. Credit market seizure in the United States.
2. Credit market seizure in Europe about one year later.

[Po_d Mainiac]

7. This why stress tests are 'supposed' to be well..stressful.

Just prior to Lehman the LIBOR went ape-shit. No one knew who was exposed to what. Not a frigging thing has changed during the aftermath. Tier 1 reserves are even lower.

As the number of Euro Zone banks start to show bigger cracks in their foundations, the swap market will again be exposed for what it is. That being just a big circle jerk, and the vial of viagra is empty.

And the contagion is not confined to just the Old World.

And as is stated down thread, there are a shitload of people getting ready to have tread-marks left on their torsos from standing clueless in the middle of the freeway while fucking with their iShit watching reruns of American Idol.

[BR_Parkway]

8. One thing has changed since then - Too Big to Fail got Bigger

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/27/AR2009082704193.html

J.P. Morgan Chase, an amalgam of some of Wall Street's most storied institutions, now holds more than $1 of every $10 on deposit in this country. So does Bank of America, scarred by its acquisition of Merrill Lynch and partly government-owned as a result of the crisis, as does Wells Fargo, the biggest West Coast bank. Those three banks, plus government-rescued and -owned Citigroup, now issue one of every two mortgages and about two of every three credit cards, federal data show.

A year after the near-collapse of the financial system last September, the federal response has redefined how Americans get mortgages, student loans and other kinds of credit and has made a national spectacle of executive pay. But no consequence of the crisis alarms top regulators more than having banks that were already too big to fail grow even larger and more interconnected.

[dixiegrrrrl]

9. Today, this is how much the TBTF banks lost:

Bank of America ( BAC)

8.83 Down 0.71 (7.44%) 4:33PM EDT
Day's Range: 8.77 - 9.46
52wk Range: 8.77 - 15.31

lost almost half over the year.

Goldman Sachs Group (GS)
After Hours: 126.40 Up 0.17 (0.13%) 4:19PM EDT
Day's Range: 126.21 - 131.89
52wk Range: 125.50 - 175.34

CitiGroup
34.80 Down 2.46 (6.60%) 4:39PM EDT

Day's Range: 34.75 - 36.99
52wk Range: 34.75 - 51.50

I am pleased to note BAC is down by almost half.

and note that Goldman, who really does own the world, is UP a bit.