After the Greek elections of May 6 the panic aggravated. The Greek suddenly had even better reasons to suppose they could suddenly see drachmas on their bank account instead of euro, comparable to what happened in Argentina (where US $ deposits suddenly were transformed 70% lower value Argentine peso deposits).
The melting away of deposits in the PIGS is already going on since the end of last year. Deposits flow to
So everybody wanted to get rid of their deposits in PIGS (or even in the
The last few weeks thinks became worse and worse and according to Sober Look/ Kostas Kalevras the last few days € 68 miljard extra MRO (main refinancings operation facility) Money was drawn from the ECB and this is emergency Money, that very well could be necessary money to repair the holes of lost deposits in Spanish banks.
You can see the big needs of the PIGS banks at the explosive rising Target2 accounts of the Bundesbank (and DNB), that was neceesaary to compensate for the big deficits of the PIGS. This is a potential disaster for the German and Dutch tax payer when Target2 money will be paid back in liras, pesetas etc.
no longer exist as civilised nation when Target2 collapses. Luxembourg
If this trend were to continue these Target2 accounts grow above them maximum of Germany (27% of the capital of the ECB), that then has to be adjusted upward.
Merkel is forcing the other countries into the direction of a fiscal union, but that will not happen next week (or in 2012). So we will not get Eurobonds soon. Angela is right according to Bianco: without fiscal union you should not create euro bonds [PV: still they are talking about redemption bonds and some people believe if this goes on the world is saved and a huge rally will occur).
Of course people will continue to talk about a banking union, but that will not go fast enough to satisfy the capital market.
Are we really doomed? No, we can believe in the hope rally (= part two of the Bianco conference call)