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Kasz216 said: [...] Banks only lose out when countries fail though. I mean, where have banks made money with Greece and Italys failure. Stock Prices everywhere are down, the banks that own their bonds have to take massive cuts and lose money on the bonds..... if bank failures happen, most banks everywhere will lose some money... |
This is true, but even more reason for American banks to avoid attacking America too hard and for American rating agencies to avoid helping, willing or inadvertently, hedge investors in such attacks. Also, some big banks and funds actually attack whole states and their bonds, I guess they prepare in advance their portfolios to maximize profits and minimize losses from the operations, because they wouldn't shoot themselves in the foot, and they obviously don't care if others lose from them.
BTW I found the origin of the latest criticism against the ECB: it's going to help banks with a giant loan of more than 480 billion Euros at a ridiculous 1% interest rate, that's considered poking fun at averyone else, from states to private citizens, that are strangled by interests far higher when they borrow money, particularly from the banks. Almost everybody is sure that banks will keep on charging very high interests on loans, blaming the stuation, despite this big loan they received, that at such a low interest rate is almost a gift, no, actually IT IS a gift, because the profits they'll make lending that money is far higher than if they had to collect it elsewhere, while ECB will lose from the loan, as the interest rate is lower than inflation rate. Rescuing the banks was maybe necessary, but charging an interest equal to inflation rate, not lower, would have already been a help big enough, and already more than what anybody else, including states in trouble, could hope for.
http://www.thehawkeye.com/story/BC-EU--Europe-Financial-Crisis-7th-Ld-Writethru
In one or both articles, there's also the origin of my first misunderstanding: some economists suggest ECB become the lender of last resort to European governments, while the ECB president opposes the idea.
Instead, a EU separate 700 billion Euros fund, the ESM, will be raised as lender of last resort, and Italy must contribute with more than 120 billions. But many are deeply worried by some excessive powers this fund will have: http://en.wikipedia.org/wiki/European_Stability_Mechanism#Critics
