[houkbsdov]

Whereas previously we had heard extensive horror stories about banks being told to prepare for the end of the world in case the European summit (the latest and greatest one from last Friday which was supposed to find a cure for cancer among other things) failed, and even went so far as to read about preparations for trading in the drachma on a when issued basis, once the summit passed (and it was clear that media posturing would do nothing to fix what has already been a failure and it would be best to remove the threats of "reality" from the public's attention) all such "end of the world" speculation promptly disappeared - after all why remind people that things are now worse than ever. Until today. According to the Australian Finance Review (link - subscription required), banks down under "have been given 1 week by regulators to stress test how they would handle a spike in joblessness, plunge in home prices spurred by EU debt crisis." Aka a European "Meltdown." And since we don't have immediate access to the article, we leave it to Bloomberg First Word to describe for us what the article says:
Australian Prudential Regulation Authority envision worst-case scenario of 12% unemployment, 30% drop in house prices, 40% fall in commercial property values, AFR says
Banks will assume that write-offs, other mitigation measures are unavailable; later stress tests might allow for such steps, AFR says
Australia’s banks have A$87.2b of exposure to Europe, or 2.7% of assets, with A$74.6b of it mostly tied to bank borrowers in France, Germany, Netherlands, AFR says, citing RBA statistics

Why is this notable? Because unlike before, when media reports were really a propaganda ploy to get European politicians to collaborate (what has now proven to be an impossible task), and nothing but a rhetorical device, this time around, the warning is for real. And, more importantly, we have a sense of urgency, courtesy of the 1 week deadline: the question then is is it really that bad, and does Europe truly have a little over a week for global banks to prepare for the inevitable fall out?

Lastly, how long until our own prudent leaders decide it may be time to push the Stress Test scheduled for next year forward, just in case the "unthinkable" does happen, and US banks end up getting stampeded even as the rest of the world is already prepared for a worst case scenario?

We are confident Tim Geithner will get right back to us asap on all of these open items.

http://www.zerohedge.com/news/austra...opean-meltdown

[CtEkM8Vq]

Eurozone government defaults looking certain
2011-DEC-15

For some time I have taken the view that rescuing eurozone governments from their financial crises was too big a job for the European Central Bank, which should stick to keeping the banking system going. The only hope was that individual governments would be forced to face up to the reality of cutting government spending hard and quickly. They have failed to even begin to address this fundamental problem. As a consequence, it is now impossible for them to roll over their maturing debt, let alone raise new money. Instead there is now a scramble into cash as banks and hedge funds prepare themselves for sovereign defaults.

Posturing over geared stability funds, financial transaction taxes, installing unelected governments, putative treaty changes and finally enhanced fiscal supervision proposals have finally convinced markets that the only outcome is widespread government defaults. There is now no alternative and the fallout will have to be managed.

The inept handling of this crisis has weakened the eurozone’s banks to the point that they are unable to subscribe for more debt. Furthermore, the ECB cannot afford to see the liquidity it provides to European banks disappear into new government bonds that will default anyway. Therefore, it is now in the ECB’s interest to see sovereign defaults occur as soon as possible, unless the International Monetary Fund can come to the rescue, which is looking less likely by the day.

There is growing evidence that there is insufficient support for an IMF bailout from its member governments. The IMF’s charter is as an intergovernmental lender of last resort, not a supporter of government profligacy. Following the failure of the G20 meeting in mid-October there has been no substantive attempt to rescue the eurozone. The telephones might be buzzing, but there is no urgent meeting, suggesting that events must take their course.

So the quicker these defaults happen, the sooner the ECB can work with the national central banks to bail out the major Eurozone commercial banks. Once we accept this line of reasoning, we must think about the likely candidates. In no particular order they are France, Italy and Greece: France and Italy because they have to roll enormous amounts of debt in the coming months and Greece for obvious reasons. Less pressing perhaps but also likely default candidates are Belgium, Spain, Portugal and Ireland: Belgium might fall with France and the others have the potential to struggle through but might chose to wipe the slate clean. And when the first goes, the rest will surely follow rapidly.

The sequence of events is now under way. This will be followed by the defaults themselves, and the likely trigger will be escalating French government bond yields.

In summary, we have reached the point where the ECB’s vested interest requires eurozone governments to default because further delay will make the rescue of the currency and banking system more difficult. Expect co-ordination between the Bank for International Settlements, The Fed, Bank of England and Bank of Japan to smooth markets through the turmoil and to back up the ECB.

http://www.goldmoney.com/gold-resear...gmrefcode=gata

[Prererularl]

Aussie banks are bankrupt already as evidenced by:

1) each of the 4 major banks have each received $20 billion in emergency funding stolen by the government from it's employees retirement funds
2) the ongoing failures of the ATM cash network by each of the majour 4 banks in turn, all of which are unexplained

[MinisuipGaicai]

Aussie banks are bankrupt already as evidenced by:

1) each of the 4 major banks have each received $20 billion in emergency funding stolen by the government from it's employees retirement funds
2) the ongoing failures of the ATM cash network by each of the majour 4 banks in turn, all of which are unexplained

The bankrupt banks have too prepare for the bankrupt countries..............

[Twendypreency]

Seems Australian banks were (and still are) the only ones looking at the crisis objectively, and doing anything at all to avert it.

Why do you suppose that is?

[capeAngedlelp]

So what is the boots on the ground observation from our resident Aussies?

[errolurberozy]

I've made mine. I don't see a plunge in house prices though. That suggests sudden shocks. I think it will be a bit more medium term and there will still be high demand places for a while like Perth in the West, the NT and Queensland.

Prices have risen dramatically in energy, food. They told everyone to expect to pay double for energy after 3 years of 30% increases. Food maybe 15% over the last 2 years. Gas has been pretty steady although the spread to diesel is wider now. More than 10c a litre.

As for the banks they have all had these rolling outages in their ATM systems as well as on line but not as much. To me this says cashflow problems and the way to stem these is to stop dispensing cash. This has been happening for the last year. Will Europe go down in the next week/ten days? You could draw that conclusion or it might be a jump. It's good to have deadlines to get things done. Business is difficult but some states and sectors are still strong. This is where you count your lucky stars.

[truportodfa]

Might be code language for the chief banksters. Hold on. I put my decoder ring on.

Attention all elite! You have one week to get into the lifeboats and cast off while the band is playing music on the decks for the oblivious sheep.

[maniaringsq]

can't remember where i herad it, but someone said dec 19 was d-day for europe. either get it fixed by then or...DOOM!

[Dogxzysl]

can't remember where i herad it, but someone said dec 19 was d-day for europe. either get it fixed by then or...DOOM!

Ah, great another date of DOOOOM! In the article in the OP they excluded Britain from Europe. I bet if they were included the exposure would be way over 10%... Doesn't really matter what your exposure to Europe is though if Europe goes down, you will end up having great exposure to someone who has great exposure to Europe, so you are fucked either way!

[zCLadw3R]

Seems Australian banks were (and still are) the only ones looking at the crisis objectively, and doing anything at all to avert it.

Why do you suppose that is?

Its harder too see objectively if your country is going down the gurgler, Australia is OK so far but anything could happen.Its just in a fortunate position and being on the other side of the world sometimes things can be clearer if perceived from a distance.

[Zpxbawtz]

can't remember where i herad it, but someone said dec 19 was d-day for europe. either get it fixed by then or...DOOM!

It looks like its DOOM either way .