Banks under siege in the business market

What we have seen in European markets and on the Milan Stock Exchange in particular, could be interpreted as a sign of a looming threat. But what has happened on Wall Street at 20:46, when the S & P has come to miss the 8, 3%, has created absolute panic. The usual computerized systems, explained that traders did not believe the excuse of human error, the same algorithms that collapsed in October 1987 made Wall Street more than 20%. Maybe this time they decided to pull the plug and end the stock has closed only with a fall of 3.24%. But back to Europe at this stage the most torrid of sovereign debt crisis He’s taken the unusual leading role in financial markets. Obviously ill.
The numbers at the closing (the Stoxx -1.46%, -2.93% Madrid, Paris -2.2%, -1.52% in London, Frankfurt -0.84%) make very little sense of loss that s ‘is tried in the afternoon. Makes it a bit ‘better Piazza Affari -4.72% or -4.4% European banking index. But you are perfectly collapses Intesa and UniCredit, a quarter of an hour remaining, were measured respectively -12.5% and -11.1%. In close losses had reduced to about 7.5%, those of Mediobanca between 6 and 8% to 7% for Banco Popolare and UBI Banca. In any case it falls twice to European banks. If you add that BTP are heavily slipped for the first time when one is manifested by the crisis, and for this I have flown for 21 cents, the spreads on German securities, and then ran in the morning on a strange voices’ imminent downward revision of the Italian rating from Standard & Poor’s (denied rumors in the early afternoon) He’s thought of a concentric attack Italy.
Attack, there was more violent in recent days, but in reality even Europe, as suggested in the euro-dollar exchange crashed to touch 1.25 (1.26 closing). Italy made yesterday by weak link, probably not for its greater financial weakness, but only because the Italian is the largest debt of the continent and our banks are those in absolute and relative terms have the largest share of securities state of their country. It all started in the afternoon after the words of Jean-Claude Trichet: what he said so terrible ECB President? “Nothing, never said anything again, this is the problem,” says the head of the securities of a major bank. Not unlike his colleagues, wanted to hear that the ECB was ready to buy the bonds of European countries, as did the Fed with the program Tarp (he bought for 1,250 billion dollars).
We then returned to a liquidity crisis like in 2008? Not exactly, because the liquidity is abundant today, but bond markets are some days almost completely illiquid. So just why is exchanged between the prices proposed purchase and sale came to differ from 15-20 basis points, no one buys and sells no more. If you think a basis point equals about 7 cents of return, we understand that a bond would make 1% more or less depending on whether it sells or it purchases. So, from Tuesday, are almost entirely disappeared from the trading book the major international operators, the so-called market makers.
Illiquid a market means that those who must sell it can not do and is forced to protect their licenses in other ways: by purchasing credit default swaps, for example, yesterday in fact are sketched up, both for government bonds and for those corporate (iTraxx indices are the highest in the last 12 months). But there is another way to sell shares in the banks that are full of government bonds. It is a sort of alley, because the stock market is vastly smaller than the bond. So, when around 16 people from America yesterday began to help himself by selling bank stocks in different countries, the sector has begun to fall. Other investors are becoming queued pack baskets (basketball) put options (downward) by the international brokers.

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Eli Wads is one of our expert authors in technology and business fields.Currently living in San Marino, Eli has graduated at Southwestern Academy with a Bachelor Degree in business in 2008. Contact him by dropping him an e-mail at

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