{"id":6296,"date":"2012-08-01T13:09:21","date_gmt":"2012-08-01T11:09:21","guid":{"rendered":"http:\/\/boilingfrogs.stanislasjourdan.fr\/?p=905"},"modified":"2019-12-15T17:09:24","modified_gmt":"2019-12-15T16:09:24","slug":"euro-crisis-roundup","status":"publish","type":"post","link":"https:\/\/stanislasjourdan.fr\/en\/2012\/08\/01\/euro-crisis-roundup\/","title":{"rendered":"Euro crisis: worrying facts roundup"},"content":{"rendered":"<p>Being busy with my projects, I&#8217;m not posting very much these days. So here is a quick roundup of warning signs I&#8217;m looking in my radar.<!--more--><\/p>\n<h3>ECB refinancing operations have never been so large<\/h3>\n<p>Not very surprisingly, european banks are more and more relying on the ECB to achieve their funding needs. At end june, total refinancing operations (including emergency liquidity assistance -ELA) peaked at 1.290 trillion euros, a new record. As my home-made chart shows below, we can clearly see a new bump in the use of these funding tools in june. Should we conclude that the two LTRO operations conducted in december and february were not enough?<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-907 alignnone\" title=\"eurozone-reliance-ecb\" src=\"http:\/\/stanislasjourdan.fr\/wp-content\/blogs.dir\/2\/files\/2012\/08\/eurozone-reliance-ecb.png\" alt=\"\" width=\"600\" height=\"371\" \/><\/p>\n<p>The case of Spain, Cyprus, Portgual and Greece are particularly worrisome:<\/p>\n<ul>\n<li><strong>Spain<\/strong>: ECB refinancing operations now peak at 365 bn euros (new record), with a jump of 44bn last month<\/li>\n<li><strong>Cyprus<\/strong>:\u00a0I already <a title=\"Confirmed: central bank of Cyprus is rescuing cypriot banks through ELA\" href=\"http:\/\/boilingfrogs.stanislasjourdan.fr\/2012\/05\/11\/cyprus-ela\/\">noted<\/a> that the central bank had been using its ELA weapon to refinance the cypriot banks. Since then, the outstanding ELA have been rising to 8bn euros at end-june (40% of Cyprus&#8217; GDP!), from 5.6bn euros in may.<\/li>\n<li><strong>Portugal<\/strong>: new high record at 60.5bn euros<\/li>\n<li><strong>Greece<\/strong>: \u00a0new record at 135bn euros refinanced through the ECB operations and the Bank of Greece&#8217;s ELA which now reaches 62bn euros.<\/li>\n<\/ul>\n<h3>Greece: endless deposit flight<\/h3>\n<p>Let&#8217;s stay in Greece and have a closer look on the deposit flight affecting the banking system. As we can see, overall deposits (excluding government) reached a low-record of 172 bn euros from 240 bn pre-crisis.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-910\" title=\"deposit-vs-refinancing-greece\" src=\"http:\/\/stanislasjourdan.fr\/wp-content\/blogs.dir\/2\/files\/2012\/08\/deposit-vs-refinancing-greece.png\" alt=\"\" width=\"600\" height=\"371\" \/><\/p>\n<p>If we look at the month-to-month evolution, we can clearly notice the<strong> accelerating trend of the outflow<\/strong> in the last two months:<\/p>\n<p><a href=\"http:\/\/stanislasjourdan.fr\/wp-content\/blogs.dir\/2\/files\/2012\/08\/deposits-greece-evolution.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-911\" title=\"deposits-greece-evolution\" src=\"http:\/\/stanislasjourdan.fr\/wp-content\/blogs.dir\/2\/files\/2012\/08\/deposits-greece-evolution.png\" alt=\"\" width=\"600\" height=\"371\" \/><\/a><\/p>\n<h3>Spain: doubtful loans still increasing<\/h3>\n<p>Last data release by the Bank of Spain reveal a new leap of non-performing loans to 155.8bn euros from 152.7bn. This follows the trend of a <strong>+2% annual growth<\/strong> since last summer. A chart:<\/p>\n<p><a href=\"http:\/\/stanislasjourdan.fr\/wp-content\/blogs.dir\/2\/files\/2012\/08\/spain-doubtful-loans.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-908\" title=\"spain-doubtful-loans\" src=\"http:\/\/stanislasjourdan.fr\/wp-content\/blogs.dir\/2\/files\/2012\/08\/spain-doubtful-loans.png\" alt=\"\" width=\"600\" height=\"371\" \/><\/a><\/p>\n<p>Doubtful loans now represent <strong>15.6% of all secured loans<\/strong> issued by spanish banks. A big bad black hole, that will most likely <em>not<\/em> decrease as <a href=\"http:\/\/http:\/\/www.reuters.com\/article\/2012\/07\/27\/us-spain-unemployment-idUSBRE86Q09420120727\">unemployment keep on rising<\/a>\u00a0and people go bankrupt&#8230; and real estate market go down.\u00a0Come to think of it, this chart from the Bank of Spain is no much\u00a0reassuring either:<\/p>\n<p><a href=\"http:\/\/stanislasjourdan.fr\/wp-content\/blogs.dir\/2\/files\/2012\/08\/real-estate-spain-adjustment.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-913 aligncenter\" title=\"real-estate-spain-adjustment\" src=\"http:\/\/stanislasjourdan.fr\/wp-content\/blogs.dir\/2\/files\/2012\/08\/real-estate-spain-adjustment.png\" alt=\"\" width=\"441\" height=\"377\" \/><\/a><\/p>\n<h3>Nope, Ireland is not getting (much) better<\/h3>\n<p>Ireland is <a href=\"http:\/\/online.wsj.com\/article\/SB10000872396390443477104577550724270424592.html\">back in the sovereign bond market<\/a>, but don&#8217;t get fooled: the country is still a long way to go before any sort of recover. Just a few facts to keep in mind:<\/p>\n<ul>\n<li>While decelerating,<strong> deposits are still outflowing<\/strong> the country : -0,9% on the last 6 months. We are far from a complete stabilization.<\/li>\n<li>Mortgages in arrear (ie. not being repaid) are\u00a0<a title=\"Meanwhile in Ireland: mortgage arrears still growing\" href=\"http:\/\/boilingfrogs.stanislasjourdan.fr\/2012\/05\/28\/ireland-mortgage-arrears-growing\/\">still increasing<\/a> and represent more than <strong>10% of all mortgage loans<\/strong>. And you thought the bubble was over?<\/li>\n<li>In 2012 alone, the Irish government (ie. taxpayers) have to <strong>repay <a href=\"http:\/\/bondwatchireland.blogspot.fr\/\">19bn euros<\/a> to the private investors of the bankrupt zombie banks<\/strong> nationalized during the crisis. In other words, the bank crisis is far from over and creates a huge redistribution of wealth from the taxpayers to foreign investors, private savers, and others vulture funds. This will not help any domestic growth&#8230;<\/li>\n<li>Irish banks are still heavily relying on the ECB and ELA operations to achieve their fundings (cf chart below). This means confidence in the banking system has <em>not \u00a0<\/em>been restored, despite huge recapitalization with public funds.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-912\" title=\"ireland-ecb-refinancing\" src=\"http:\/\/stanislasjourdan.fr\/wp-content\/blogs.dir\/2\/files\/2012\/08\/ireland-ecb-refinancing.png\" alt=\"\" width=\"600\" height=\"371\" \/><\/p>\n<p><strong>I surely missed other stuff! Please comment below if you have any clew to share.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Being busy with my projects, I&#8217;m not posting very much these days. So here is a quick roundup of warning signs I&#8217;m looking in my radar.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_links_to":"","_links_to_target":""},"categories":[1],"tags":[352,340,350],"class_list":["post-6296","post","type-post","status-publish","format-standard","hentry","category-blog","tag-ela","tag-ecb","tag-eurozone-crisis"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p2om4O-1Dy","_links":{"self":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts\/6296","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/comments?post=6296"}],"version-history":[{"count":1,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts\/6296\/revisions"}],"predecessor-version":[{"id":6395,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts\/6296\/revisions\/6395"}],"wp:attachment":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/media?parent=6296"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/categories?post=6296"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/tags?post=6296"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}