{"id":44904,"date":"2019-03-30T08:22:08","date_gmt":"2019-03-30T13:22:08","guid":{"rendered":"https:\/\/olduvai.ca\/?p=44904"},"modified":"2019-03-30T08:22:14","modified_gmt":"2019-03-30T13:22:14","slug":"can-the-eu-survive-the-next-financial-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=44904","title":{"rendered":"Can the EU Survive the Next Financial Crisis?"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/mises.org\/wire\/can-eu-survive-next-financial-crisis\">Can the EU Survive the Next Financial Crisis?<\/a><\/h3>\n\n\n\n<p><a href=\"https:\/\/mises.org\/wire\/ecb-inflationists-are-crippling-europe\">Despite the ECB\u2019s subsidy of the Eurozone\u2019s banking system<\/a>, it remains in a sleepwalking state similar to the non-financial, non-crony-capitalist zombified economy. Gone are the heady days of investment banking. There is now a legacy of derivatives and regulators\u2019 fines. Technology has made the over-extended branch network, typical of a European retail bank, a costly white elephant. The market for emptying bank buildings in the towns and villages throughout Europe must be dire, a source of under-provisioned losses. On top of this, the ECB\u2019s interest rate policy has led to lending margins becoming paper-thin.&nbsp;<\/p>\n\n\n\n<p>A negative deposit rate of 0.4% at the ECB has led to negative wholesale (Euribor) money market rates along the yield curve to at least 12 months. This has allowed French banks, for example, to fund Italian government bond positions, stripping out 33 basis points on a \u201criskless\u201d one-year bond. It\u2019s the peak of collapsed lending margins when even the hare-brained can see the risk is greater than the reward, whatever the regulator says. The entire yield curve is considerably lower than Italian risk implies it should be, given its existing debt obligations, with 10-year Italian government bonds yielding only 2.55%. That\u2019s less than equivalent US Treasuries, the global risk-free standard.<\/p>\n\n\n\n<p>Government bond yields have been and remain considerably reduced through the ECB\u2019s interest rate suppression and its bond-buying programs. The expansion of Eurozone government debt since the Lehman crisis has been about 50% to \u20ac9.69 trillion. This expansion, representing \u20ac3.1 trillion, compares with the expansion of the Eurosystem\u2019s own balance sheet of \u20ac2.8 trillion since 2009. In other words, the expansion of Eurozone government debt has been nearly matched by the ECB\u2019s monetary creation.<\/p>\n\n\n\n<p>&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Can the EU Survive the Next Financial Crisis? Despite the ECB\u2019s subsidy of the Eurozone\u2019s banking system, it remains in a sleepwalking state similar to the non-financial, non-crony-capitalist zombified economy. Gone are the heady days of investment banking. There is now a legacy of derivatives and regulators\u2019 fines. Technology has made the over-extended branch network, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[7772,233,279,284,7617,1768,1389],"class_list":["post-44904","post","type-post","status-publish","format-standard","hentry","category-economics","tag-alasdair-macleod","tag-ecb","tag-eu","tag-european-union","tag-mises-institute","tag-negative-interest-rate-policy","tag-nirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=44904"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44904\/revisions"}],"predecessor-version":[{"id":44905,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44904\/revisions\/44905"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=44904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=44904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=44904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}