The Euro Crisis is NOT Over Says CEO of Allianz, Europe’s Largest Insurer, ‘Everybody Knows That
The Euro crisis is NOT over, all of (Europe’s) bankers are lying when the say repeatedly that things are better, says Maximilian Zimmerer CEO of Allianz — Europe’s largest insurer.
He was speaking a day after the Luxembourg-based ultimate parent of Banco Espirito Santo Portugal’s second-biggest bank by market value failed to meet a bond repayment, causing chaos in European bond markets and a huge outflow of investor and depositor confidence in the bank.
Since the Global Financial Crisis of 2007 French News Online has regularly reported how unrepentant and unpunished banksters were continuing to play criminal games with the global financial system This insider’s statement is the first official confirmation of the accuracy of our reports. The article cross-posted with acknowledgements to Zero Hedge is a highly significant warning to readers to prepare for the worst. French and all other EU banks are likely to be dragged into what looks increasingly likely to be a financial firestorm.
by Tyler Durden, Zero Hedge 11/07/2014 12:11 -0400
When asking Allianz SE’s chief investment officer about the euro area’s sovereign debt woes, be prepared for an emphatic response.
“The fundamental problems are not solved and everybody knows it,” Maximilian Zimmerer said at Bloomberg LP’s London office. The “euro crisis is not over,” he said.
While extraordinary stimulus from the European Central Bank has encouraged investors to pile into the region’s government bonds this year, that’s not a sufficient remedy for Zimmerer, who oversees 556 billion euros ($757 billion) at Europe’s largest insurer.Countries are still building up their debt piles, and that’s storing up trouble for the future, he said.
As Zimmerer was speaking, investors were getting a reminder of the volatility that was rife through the sovereign debt crisis that started in 2009, as sliding stocks and bonds of Portuguese financial institutions rippled across the region’s markets. Amid a four-day slump, yields on Portugal’s 10-year bonds ended yesterday 279 basis points higher than their German counterparts, the widest spread since March 18. The securities recovered some of their losses today, tightening the spread to 268 basis points at 10:27 a.m. London time.
“There is only one country where the debt level last year was lower than 2012 and this is a signal the debt crisis can’t be over, only a recognition of the debt crisis has changed,” Zimmerer said on July 9. “If the debt levels are not going down in the end we will have a problem, that is for sure.”
Here’s the punchline: everyone knows that Draghi, the unelected dictators of Europe, and all of its bankers are lying when the say day after day that things are better. However, at least there was unanimity in the “head-in-the-sand” exercise, which recall from game theory works only if all participants in the charade agree to the ignore reality.
Today for the first time, a “member of the club” finally called out Europe on its bullshit: something that is not allowed under game theory. What’s worse, he made it quite clear that everyone else knows they are not only lying to others, but lying to themselves.
The Portuguese crisis over Banco Espirito Santo should be a reality check for European markets. Espirito Santo is just the excuse — real problems lie far deeper. The European Central Bank has been playing with fire, with junk bonds ultimately funded by German taxpayers. Investors are waking up and smelling smoke, and at some point they will get singed. The problem is that Banco Espirito Santo is a weak institution irrespective of its parent holding companies, dabbling in risky assets in emerging markets that saner banks would not touch. Its risk management department needs a major shakeup.
What happens next may be very unpleasant, because as always happens, following protracted periods of denial, and Europe has been living in a vacuum completely dislocated from reality for exactly two years since Draghi’s “Whatever it takes” speech, there is very violent convergence between reality and idiocy. And Europe is just about due for precisely that kind of denial-shattering convergence.
Today’s triple whammy from the ‘recovered’ Portugal starts with Banco Espirito Santo bonds and stocks hitting new record lows (down over 10% more on the day). The contagion has rippled across to Rioforte, which controls Grupo Espirito Santo’s non-financial arm – and is likely to default on a EUR 847 million payment to Portugal Telecom. And just to add further salt to that wound, Portuguese business lending in May collapsed at a record pace (down 8.23%).
- Allianz Warns of Bond Bubble on Draghi Cash Windfall (bloomberg.com)
- Banco Espirito Santo: A Portuguese Disaster, Not A European Crisis
- Portugal’s Bank Crisis Is a European Contagion | The Fiscal Times
- Espirito Santo: A One-Off Or The Start Of A New EU Banking Crisis
- Portuguese bank crisis is the tip of the iceberg – Diana Furchtgott
- Despite Election Promises Hollande has Rowed Right Back on Professed Hatred For Banks
- Pumping Euro-Banks to Stop them Failing, Are Big French Players Safe?
- Banks as Parasites – You’ve Been Warned
- Money in an EU Bank? Toxic Odour Ahead
- Ask Cypriots: Are Banks Criminal Enterprises?