Posted by: Tom Keene on November 10, 2011
It is growing apparent that the euro area may be too late to deliver a policy response that can avoid nonlinearity in Italy. A succession of earnings results from banks has emphasized how quickly exposure to BTPs has been reduced. With real money investors also aware of the asymmetry of risks in Italy, there are growing concerns as to whether financial institutions are willing to utilize balance sheets to absorb Italy’s financing needs. Italy has been confronted with a deleveraging spiral.
Supple, Sondergaard and Mandy, Nomura International plc.
Markets are moving and the focus, for now, is upon the Buoni del Tesoro Polianuali (BTPs). Or rather, the focus is on the various and sundry “sizes” of Italian debt. The amount outstanding (and it is an outstanding full, faith and credit debt), what comes due when, what needs to be issued, often anew, and finally, how to value what people, read France, owns. Forget the “sheets balanced.”
(I thought Italian full, faith and on credit was what you relied on when purchasing the Prada Fox Fur Clutch, $1,995, more colors available.)
I think what Team Supple delicately describes above is a tactical run on the bank. Funds are flowing, and the outflowing flowing is strategically based on fear.
This November, we harken to and beyond the fears of 1998. October was linear. This November is nonlinear. And, we have nothing to fear but jump-condition fear itself.
Maintain parabolic calm.
The ECB or the CBE or the BCE will ride to the rescue. Or, maybe not.
Where are the Roosevelts? Wir haben nichts zu fürchten außer der Furcht selbst. Or to be more precise, non abbiamo nulla da temere, ma la paura stessa. Discutere.
P.S. all translations courtesy Google Translate. I need to meet an Italian supermodel.