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Breakingviews: Risk of bank 'de-regionalisation'

Thursday, October 04, 2012 - 04:14

Oct. 4 - Peripheral EU banks buying more of their own sovereigns' debt may be a nice little earner, but it may also come back to haunt them, says Reuters breakingviews

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So today's topics Roy is breaking views side there's no easy fix for the south African platinum crisis I'm gonna talk about buying. Two eurozone rescue fat ass kicked off about one Edward had us joins me. Wright said is that this do you visualization story from from George K time is is is a -- cut. It's the sovereign sorry peripheral. Banks buying -- sovereign debts which is a good thing. But it's a dangerous thing in the event of a break. Right there. One of the great. Accomplishments at the beginning of the creation of the years and was that banks. Took regional portfolios of debt reduced risk it shared shared he's the obligations around the region made the region look like a single entity. The last couple of years that's been reversed. Two -- stand and has been more in the last six months particularly. Under pressure from the the local governments in Spain and Italy and -- the banks and buying it their own country's debt. It's great for the banks they -- and high yield it's great for the government to get ready buyer. But what it does to you is it means that if there is a breakup if Greece leaves the Greek banks going to be much where it will be much much worshipped as so this does put pressure on the politicians. To -- this ranking union. Yes until there's a banking union is going to be no reason not to you worry about your own sovereign not to support here on sovereign. If if there's a banking unions and that -- any rescue funds will be regional and that would make it much easier to have a regional portfolio again when or how to us is breaking views on on this here. We think it will come but like everything in Europe it will come slowly. But what will it will it -- how these issues. Immediately. I think that. There is nothing ever happens immediately in the years and it will gradually reduce the pressure. And will -- gradually make for a sound banking industry. But of course there are lots of twists and turns between now and then will be following closely. Now -- inherited it from New York economist tax on Tom is this danger. Tom to the global economy from the Euro zone. Com. Getting -- about run it's only getting better -- yes yes that ever since ECB said it would do whatever it takes. People don't exactly believe it but it did -- the recognition is that the Europeans are basically willing to address their problems and solve their and I. You are you more worried about outs. The Euro zone and all the fiscal cliff. I am mildly worried about the fiscal cliff I am very mildly worried about the Euro zones are -- I'm more worried about the fiscal -- Cliff but neither -- to me a tremendous sorry sorry I -- we went off track a little bit of that but it's wanted to. What are the pick -- brains -- not let's talk about class and them come. Yeah it's been a tough time for the for the miners after that for the mining companies have lost a lot of money -- -- these walk past strikes wolf there's no easy way out is that yes. And on the haven't lost enough money is basically the problem. If they close the mines or shut them down they've got a problem because shutting down -- is very expensive -- platinum is very difficult. And so they would lose a lot more money. If they close the minds they're gonna get nationalize -- market nationalize the south African political environment is is very difficult. But right now the price isn't high enough for them to make money so they can't afford to pay higher wages. So -- so he has also frustrates GAAP. -- and the only thing that will make the press go up with a sharp production and supply right now as an oversupply. But as I said they can't reduce supply easily because it's expensive here so there and terrible bind. Okay and Goodman thanks Matt and would have us not to bring music of course you regret those doors on the bring these web site. Act and the -- platform for more -- setting insights. Brokaw since I would try US breaking news show every day 1230 east and 1730 PST. -- -- -- -- -- --

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Breakingviews: Risk of bank 'de-regionalisation'

Thursday, October 04, 2012 - 04:14