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Belgians Get Cold Feet as Bailout Queen Dexia Drags them toward the Abyss

testosteronepit's picture




 

Wolf Richter   www.testosteronepit.com

Bailout queen Dexia, the Franco-Belgian mega-bank that collapsed twice and was bailed out twice within three years—in 2008 and last October—is turning into a nightmare for the tiny Kingdom of Belgium and its taxpayers.

As part of the second bailout, Belgium guaranteed 60.5% of €90 billion in debt—€54.5 billion, or 14% of Belgium’s GDP. France and Luxembourg guaranteed the remainder. Belgium then nationalized the local subsidiary, Dexia Banque Belgique (DBB) for €4 billion and assumed whatever toxic assets were fouling up the air inside. Belgian bailout manna also rained on other worthy banks, including BNP Paribas and Fortis Banque. In total, Belgium guaranteed €138 billion in debt, 35% of its GDP! In addition, it injected €15.7 billion in capital and €8.6 billion in loans into the financial sector. For a total exposure of €162 billion—gasp—41% of its GDP! For that immense taxpayer ripoff and how finally someone is going after the CEO of Dexia, read.... "Not A Bank But A Hedge Fund".

Belgians have a love-hate relationship with the left-over parts of Dexia. They employ 10,000 Belgians, but they’re also threatening to pull the country into a financial abyss. And now bad news for taxpayers is piling up. Dexia SA released its fourth-quarter results today: a monumental loss of €11.6 billion ($15.3 billion), which includes write-downs of its Greek bonds and other crappy assets, plus hefty operating losses. Of that loss, Belgian taxpayers will eat 60.5%. At the end of December, it owed €48 billion on its emergency lines of credit with central banks.

On March 1, DBB will report similarly horrid results, impacted by the usual suspects: operating losses and write-downs—among them Greek bonds, assets in its legacy portfolio, derivative products, and the liquidation of its subsidiary Holding Communal. It is still dependent on the ECB for funding. And now, the newly installed administrators found out that, despite state-ownership and the amount of money Belgium plowed into it, it is still bleeding deposits at a rate of €20 million a week. The run on the bank continues. Layoffs will become inevitable. And more capital may have to be injected.

But resistance is mounting in Belgium. Today, after the losses were announced, the opposition party Ecolo came out swinging. It accused the then outgoing federal government of having been lackadaisical when it negotiated the bailout deal and Belgium’s 60.5% share of the guarantees. In a statement released today, Representatives Meyrem Almaci and Georges Gilkinet demanded that the federal government renegotiate these guarantees—in light of the dangers they pose for Belgium’s public finances, and in light of the austerity measures foisted on the people because of the bailouts. "In the case of Dexia, it is time that the interests of the Belgian citizens are finally taken into account," the statement said.

And there is a legal challenge underway. ATTAC (Association pour la Taxation des Transactions Financière et pour l’Action Citoyenne) and CADTM (Committee for the Abolition of Third World Debt) appealed the Royal Decree of October 18 that had granted Dexia the guarantees. “Several democratic principles were violated in this case,” said their lawyer Olivier Stein. In particular, the federal parliament never voted on the guarantees though it could have. By comparison, the French parliament passed a law allowing the guarantees on the French side.

Alas, yesterday, Dexia, which would die a rapid and natural death without the guarantees, responded. It filed an application with the Council of State to intervene in the case in support of the Belgian government. Goal: get the judges to reject the appeal. The case is expected to be argued before the Supreme Court in several months.

This mayhem could have been avoided. Not with a silly stress test—Dexia passed one with flying colors a few months before it collapsed. But through regulators doing their jobs. And they weren’t blind. Unbeknownst to the public at the time, French regulators had been investigating Dexia for years and had sent its executives numerous warning letters. In the summer of 2010, they finished a report chock full with damning results and threatened to put the bank "under special supervision." And then? Nothing. But now the report has surfaced. Read.... Regulators Knew of Dexia's Problems But Were Silenced.

 

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Fri, 02/24/2012 - 10:53 | 2192538 Dan The Man
Dan The Man's picture

And to all Belgians...BAHAHAHAHA !!!!

All my love...G. Sachs.

Fri, 02/24/2012 - 10:03 | 2192363 ebworthen
ebworthen's picture

The working individual and family's livelihood is the new "bank" for the banksters and politicians.

Rule of law?

Rights?

Savings?

Sound money?

How 20th century!

Fri, 02/24/2012 - 09:39 | 2192318 bank guy in Brussels
bank guy in Brussels's picture

Was just with a friend who stopped to get funds out of a Dexia ATM machine here ...

Turns out it was made by Diebold, same company run by friends of the George Bush family, and making the machines counting American votes in the USA ...

So I suppose the Dexia figures are about as accurate as American election voting counts ...

Fri, 02/24/2012 - 11:26 | 2192673 Don Birnam
Don Birnam's picture

Come on, Eileen ! Not Dexia again ! Enough is quite enough.

http://www.collegedj.net/wp-content/uploads/2012/02/Dexys-Midnight-Runne...

Fri, 02/24/2012 - 07:22 | 2192162 egoist
egoist's picture

I don't see how any "firewalls" that they attempt to erect (and lost taste for - in another post about Germany) will matter at all. This is already devouring from the inside of a lot of these countries' banks. Somebody tell me how this doesn't turn into a continental war.

Fri, 02/24/2012 - 07:26 | 2192167 Ghordius
Ghordius's picture

it's not going to turn into a continental war. I'm not 100% sure about inter-continental, though, nevertheless not necessarily a bloody conventional war.

Fri, 02/24/2012 - 06:59 | 2192147 disabledvet
disabledvet's picture

and i have just the man for the job to get to the bottom of this:
http://www.youtube.com/watch?feature=player_detailpage&v=HhHwnrlZRus

Fri, 02/24/2012 - 04:13 | 2192018 nathan1234
nathan1234's picture

The Belge after the Greek

 

Fri, 02/24/2012 - 02:09 | 2191910 xela2200
xela2200's picture

Stress test --> Timmiieee!

Fri, 02/24/2012 - 02:07 | 2191909 slewie the pi-rat
slewie the pi-rat's picture

thxz t_pit!  & wolf!

i was following this and then i lost the trail!

i asked about dexia a coupla times and a few daze ago i was told they lost like 15 Bil green stamps last year

this is great journalism, sir

but i'm biased b/c i've been desiring more info & analysis on the zombie banks;  and, i've been writing about it on the strings, too, asking how the banksters use these "shells" to pull off their various heists

with the advanced fascism, most of theWest doesn't even ask these questions anymore

nothing to see here;  move along or we'll think you're suspicious...

so here's belgium with enough decency and democratic values to ask:  wtf?

we need to ask this question more, imo, so +++, again!  WTF???

Fri, 02/24/2012 - 01:41 | 2191888 silverbullion
silverbullion's picture

Slavery.

Fri, 02/24/2012 - 01:00 | 2191849 steve from virginia
steve from virginia's picture

The same exact 'thing' (bailout) happened in Ireland.

Lessee ... how are the Irish doing today?

(That's a tough question, it's like, 'how hard did you kick your dog today?')

Fri, 02/24/2012 - 00:44 | 2191831 williambanzai7
williambanzai7's picture

The difference between reckless public officials and fraudulent businessmen? One goes free and the other goes free rich.

Fri, 02/24/2012 - 00:21 | 2191791 sodbuster
sodbuster's picture

>In the summer of 2010, they finished a report chock full with damning results and threatened to put the bank "under special supervision." <

Just like Animal House- f'n bankers put 'em on double secret probation!! Ohhhh! That'll scare the crap out of 'em!!

Fri, 02/24/2012 - 00:17 | 2191781 onlooker
onlooker's picture

Good post!

Fri, 02/24/2012 - 00:00 | 2191764 SwingForce
SwingForce's picture

Bankers are Professional Bullshit Merchantz, worldwide. They suck, don't listen to a single word they say.

Thu, 02/23/2012 - 23:41 | 2191728 azzhatter
azzhatter's picture

At least they have Herman Von Rumpboy

Thu, 02/23/2012 - 23:27 | 2191690 q99x2
q99x2's picture

Did the Fed get rid of the dip? I'm still waiting to BTFD. Its been about three months now. Maybe after FaceBook goes public there will be a f'n dip.

Who would have such omni-potent power to remove the f'n dip from the BTFD. Oh I know. I knew I shouldn't have waited until the Fed did their year end computer upgrades.

Maybe this will help. Almighty Ben Bernank...if you are out there listening...please allow the return of the f'n dip. There I prayed to the Bernank. Maybe god is dead. Heaven forbid maybe the Benank is dead and they've been pulling an OBL over on us. His neck did seem a little shorter the last time he appeared.

Nooo That's right I remember reading about it. Here it is right in the Farmer's Almanac. "Bankers necks often shrink up proportionate to the amount of greed within them. Probable cause: subconscious fear of nooses." He's probably ok. He hasn't been caught yet.

Thu, 02/23/2012 - 23:46 | 2191738 DeadFred
DeadFred's picture

Didn't you see the dip this morning??? S&P was below the 10 day moving average for several minutes. What, did you expect that the dip would wait around for you? Ya gotta stay alert if you want to see the dip 'cause it's really shy. What, you expect a dip lower than the 10 dma? Get real.

Thu, 02/23/2012 - 23:06 | 2191639 Element
Element's picture

Those that live by the sword die by the sword.

Fri, 02/24/2012 - 01:51 | 2191893 silverbullion
silverbullion's picture

Not true... assuming that you're referring to Jesus's words in Matthew 26:52. This and other verses should not be used out of context. God commands us in His Word to be armed and always ready for war, because the evil forces of this world has no intention to leave us alone and they won't be defeated without using force. This is not to say that it's not foremost a spiritual war, because there have to be a change of mind, otherwise the physical bodies won't make the right movements.

Fri, 02/24/2012 - 10:35 | 2192429 TrulyStupid
TrulyStupid's picture

God commands many things (if you believe most versions of the christian bible), some of them contradictory and others that contradict what the New Testament bloggers claim that Jesus said. Here are some of the more interesting quotes as compiled on a website run by the dreaded atheists:

http://www.positiveatheism.org/crt/nbw.pdf

When we mortal sinners cherry - pick and spin these quotes to support our very secular point of view (like the necessity of pre-emptive strikes on those who interpret God's words to their own advantage, or of forcing women to be subject to state sponsored cavity searches) we are not acting in an ethical fashion..

Fri, 02/24/2012 - 07:11 | 2192155 Ghordius
Ghordius's picture

"God commands us in His Word to be armed and always ready for war, because the evil forces of this world has no intention to leave us alone and they won't be defeated without using force."

hemmm... do you really think that He has to command us to do something we do so spontanously and with great relish?

I usually connect religion with going the hard way instead of the easy way - the essence of morality being to do what you feel is just and fair even when the obvious results are unjust and unfair for you.

Fri, 02/24/2012 - 08:32 | 2192217 Legolas
Legolas's picture

The problem with your argument is "YOU don't define morality" !  That would make morality subjective to your standards.  Which, btw, would put them on no higher par than those of Silverbullion.  KWIM ?

Fri, 02/24/2012 - 11:06 | 2192598 MobBarley
MobBarley's picture

Correct. Morality is subject to your own standards. That's why your life is personal and not general.

The valuation that you have on your morality is also a personal choice, and in your case, we

see that valuation in persistent backwardation.

 

Fri, 02/24/2012 - 04:38 | 2192033 Element
Element's picture

Shut your hole 'religious' idiot.

Fri, 02/24/2012 - 11:13 | 2192614 MobBarley
MobBarley's picture

As if some greater edict is issued with the prepalation 'religious', Idiot alone being insufficient

to empower your critically arrived verdict. Which reminds me that few if any of you any more

have that AHA moment which the Zensters promoted to deification. Why do you suppose that is?

 Perhaps it is because all of you drank the cup of stupid and now meander downstream

rudderless and chaotic, hoping only to bumper car as many other rudderless skipjacks as possible.

 The water once calm now raging white, rocks ahead in plain sight

 you sold the oar and the anchor for crack

 you can't get it back

 cocaine

 Have a sectarian day.

 

Thu, 02/23/2012 - 22:57 | 2191619 Manthong
Manthong's picture

Sounds like it's time for another all night meeting, some waffles, expresso and news conference to announce another meeting. 

Thu, 02/23/2012 - 23:43 | 2191733 Dermasolarapate...
Dermasolarapaterraphatrima's picture

You mean 9 course dinners, champagne, Chateau au Rothschild (1976) and late night roulette....

Fri, 02/24/2012 - 11:41 | 2192737 stocktivity
stocktivity's picture

Don't forget the "party girls"

Thu, 02/23/2012 - 22:44 | 2191588 Buck Johnson
Buck Johnson's picture

Things are starting to come apart real quick.  The tide is going out and everyone is seeing who is naked and who isn't.

Fri, 02/24/2012 - 11:35 | 2192709 Uchtdorf
Uchtdorf's picture

You win the prize for including three metaphors in a two sentence post!! Please forward your home address so we can mail you a voucher for an all-expenses paid trip to Guantanamo.

Thu, 02/23/2012 - 22:42 | 2191576 acompletedouche
acompletedouche's picture

Bullish as it gets,buy more ES!

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