ECB holds Key to resolve Euro Crisis

In the Swiss news paper NZZ economist Barry Eichengreen argues that only the ECB can resolve the Euro Crisis by guaranteeing maximum yields by buying Euro government bonds:

• There are no inflationary pressures since this debt crisis is deflationary. So stop worrying about the increased monetary base.
• The discussion about ECB independence is ludicrous, because the ECB will cease to exist should the Euro break up.
• Forget the EFSF! It is to small and nobody will ever give money for leveraging it.
• Southern European countries should get their fiscal situation in order, but at the same time implement policies to increase economic growth in the long term. 

BCA has held a webcast today where chief editer Peter Berenzin essentially argued on the same ground. Moreover, he said that German banks would become insolvent should in an Euro break up Spanish and Italian debt be converted into devalued Pesetas or Lire...

Bad News from Casino Banks

The news just got in that a rogue trader caused a loss at UBS of CHF  2 bln. Apparently, a forex trader has been caught on the wrong foot in the wide market swings. While market participant think this is peanuts, they wonder why this is still possible after the losses of monsieur Jerome Kerviel at SocGen.
At a minor conference call of Credit Suisse this morning which focused of PIIGS sovereign debt, analyst Chistine Schmid categorised banks in 3 brackets according their strength.

According to her analysis I would only hold debt of Rabobank, Deutsche Bank, HSBC, and Barclays (UBS is of course now under review). She also said that European banks need to raise EUR 50 bln. equity to fullfill the Basel standards in the coming years due to losses on their sovereign PIIGS bonds, which is very negative for their share prices.