Dexia Bailout On Verge Of Collapse, Threatens To Take France AAA Rating Down With It
Having followed the fortunes of the beleaguered Belgian bank from before it appeared on anyone's worksheets, we are hardly surprised that the EU Commission charged with confirming the good-bank / bad-bank restructuring is concerned at the deal that Belgium has with the French (and Luxembourg) government to backstop/finance Dexia's debt. Belgium's De Standaard (and two other European newspapers) today suggests the Belgians fear the EUR90bn deal is 'not feasible' as it stands (with a Belgium 60.5%, France 36.5%, and Luxembourg 3% weighting). Given the change in market conditions the commission, according to the article, is concerned at the ability of each country to finance its respective guarantee (most obviously Belgium) and therefore can renegotiate the October bailout deal. Belgian FinMin Reynders would not confirm the renegotiations but was evidently waiting on the commission's 'comments or additions'. The French are obviously not-amused and of course, any increase in the size of France's guarantee will further impact its ability to maintain the much-vaunted AAA rating.
The initial bailout deal was profitably traded via our suggestion of DEX-Belgium compression and as the orange oval shows risk was very rapidly transferred from DEXCL (Dexia's CDS level compressed - green arrow) onto the balance sheet of Belgium (red arrow showing how Belgium CDS underperformed France CDS).
The last week or two has seen systemic concerns creep into all of the spreads involved - though notably the spread between Belgium and France has been relatively stable around 110bps. Idiosyncratically DEXCL has decompressed notably as chatter about the deal's collapse grows louder.
We suspect that there will be some renegotation that pushes more pain to bondholders in return for France shouldering more of the burden and so a DEXCL decompression vs Belgium-France compression trade makes some sense (as a risk-transfer trade) but cost of carry is high. Perhaps the simplest way (and cheapest) is outright short France credit.
From De Standaard: Dexia Rescue Plan Is Not Feasible (Via Google Translate)
BRUSSELS - Belgium asks France to renegotiate the bailout Dexia Holding, also on the distribution of the state guarantee of 90 billion. The euro crisis plan unfeasible.From our editors coup de théâtre in the Dexia case. While President Jean-Luc Dehaene again yesterday for the special Dexia commission appeared to a clarification of the trap and the dismantling of Dexia shows an important part of the Belgian-French agreement of October 9 obsolete. In particular, the rescue plan that Belgium France and Luxembourg have agreed in early October for Dexia Holding (the rest couch, red), stands on the slope. And this includes the much-discussed state guarantee of 90 billion to finance the remaining banks - especially the more massive historical bond portfolio and the unsold subsidiaries of Dexia behind. Belgium dropped by France to convince the majority (60.5 percent) of the financing of the remaining bank Dexia is a Belgian guarantee to cover.
This guarantee, Dexia to enable the next year to 54 billion euros from the Belgian bond market to pick up. This would come in direct competition with Belgium itself, that money needs to get his debt and deficit financing. The Belgian bond market is quickly drying up. This makes it impossible for the coming years tens of billions of Dexia to retrieve. Specialists estimate that for Dexia 'only' room for 20 to 25 billion euros from the Market. Since the agreement Dexia Belgium mistrust of financial markets, allowing long-term rates has increased dramatically: the beginning of October is 3.6 percent in Belgium paid ten-year loan, now it is 4.9 percent. And that has consequences for the rest of the financing bank.
"Dexia becomes intolerable as it is such high interest rates on the market to pay, insiders warn. French resort Belgium, France and the European Commission has therefore already stated that the bailout Dexia Holding need re-negotiation. As a possible way a new agreement in which the French, backed by Belgium, one additional share of the funding to take on. Much time is not. For the euro crisis threatens not only Belgium in need of money to bring the whole bailout for Dexia falters. Dexia Holding should not only pay high long-term market, it needs also a costly fee for the state guarantee.
Total (financing) costs of the massive bond portfolio in the rest thereby threaten the bank proceeds to beat. Allowing the remaining banks are structurally unprofitable. All parties involved are treated with the hands in the hair. "What now?" The remaining bank fail let go is not an option, it reads. The consequences for Dexia Bank Belgium (DBB) could not be foreseen. "The Belgian state bank to the rest Dexia bank an overdraft - no guarantees, so - given 20 to 25 billion euros, and then that money completely lost."
The only solution that Belgium sees that France itself the majority of The money the rest of Dexia bank needs from the French bond market gets. Belgium would be the part that France collects on behalf of our country, with guarantees covering. But the French are not designed for jumping. They believe that Belgium commits perjury. Paris itself is under great pressure. The credit agency Moody's yesterday put pressure on France once again by openly to question the sustainability of the French AAA credit rating. In addition, in the spring French presidential elections. Dexia Belgium ruin.
It seems that Belgium is 'pulling a Greece' - knowing that it has all the leverage and France has much larger exposure to the problem - once again the unintended consequence of capitalism wiothout failure is writ large.
Chart: Bloomberg
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When you own other people's shit, it doesn't stink any less.
quote of the day. thanks for the laugh
Sprott buying $1.5 billion in silver.
http://goldandsilverlinings.com/?p=1751
sounds like 15 million silverbugz about to get fleeced
Stay calm everyone, because The Bernanke & Gang are really Johnny On The Spot, having just issued their final rules on U.S. Bank stress tests today, and also reviewing capital requirements of said institutions.
I'm very glad that they're acting so urgently with the very real possibility that these banks may have uber exposure to Euro Zone liabilities, and given that EU counterparties of said banks may be on the cusp of hyper-implosion within hours/days/weeks.
Thanks for being....you....Bernank.
That is the strangest correlation I've heard. Paper BUgs or Physical bugs?
Pretty interesting though. But Silver aside.... the plan is pretty obvious now. Hurt a bank. A big bank in trouble always puts a few smaller ones in a death spiral.
From there to a Greece/Italy style take-over is a few weeks work. France is definitly a FFFFpiG. But it's nto going down either. Not France, not Italy. Too big to Fail.
More important, WHY has Belgium not had a government for so long? What is it intended to be?
ORI
final-cut-trailer-01/
ORI, isn't it apparent? The prettiest pig ever to have lipstick applied by a central banking cabal; or in more popular parlance, the Death Star, from which Dearth Blankfein will strip the remainder of the wealth from the far-reaching provinces to shower the local hookers with gifts.
Fascinating, eh Zhandax? Heart of the EU cannot have a government. It's a tell, for sure.
ORI
a puppet can not be the puppet master - Oz dines on mussels
My understanding was that the political situation in Belgium was down to a largely unreported schism between the Flemish (Dutch-speaking) and the Walloons (French-speaking), mostly down to significant cultural differences, the insane institutions created to support these differences in the different regions, and economies of Flanders and Wallonia moving at entirely different speeds -- and the fact that economically-successful Flanders does not like having to pay for struggling Wallonia, nor does it like its left-leaning policies that are funded on its dime.
Belgium will, most probably, undergo some sort of partition in the next few decades; they are a perfect example of how the concept of multi-culturalism simply does not work.
This is all rather interesting in light of the current EU fiasco. If Belgium, a founding member of the EU and the host to the HQ, cannot keep a simple dia-cultural geographical space functioning within one political entity, then how the hell is the EU ever going to manage Euro-federalism or any kind of transferunion?
Awkward irony.
Thanks Quiet and that surely is the reason the people have. Or have been given. But, given that it si the permenant home of the EU HQ, makes my Spsenses tingle. Wicked designs and all!
ORI
The Wallon / Flemish divide underwent an inversion with the rise of the Germand and Dutch economies.
Historically it was the aristocrats and bourgeois who spoke French; the farmers and workers spoke Flemish.
Much like ireland, the european institution is changing all that. The powerhouse of Brussels (the city)
is now 10% expats, who bring in the lion's share of the wealth and are making local politics irrelevant.
though it is telling that expats are charged the most in taxes, up to an enormous 57%, which seems
like a clear violation of european directives of fairness and equality for all residents.
But that's Belgium for you. Fairness has never been part of the equation. In fact they actively created
artificial class and caste distinctions in The Congo and Rwanda in the colonial days. It's a wee little
kingdom producing a smidgen of energy, steel, and exporting blood diamonds and small arms worldwide.
Oh, and it runs a small financial laundering and tax evasion scheme on the side ala luxemburg/liechtenstein.
Dexia for example was basically created to allow Belgian savings caisses and credits to speculate in the
eurozone big leagues. It's thus up to the Belgian crown to nationalize and patch the problem if it blows up.
Like a lot of old europe, it's sitting on old wealth and does not produce or participate enough in the modern
economy and is thus due for a dowsizing or rather rightsizing. I put Italy, Austria, Nederlands in that list too.
That's basically the essence of the european problem: class warfare, with old aristocrats hanging on to
the vestiges of accumulated but unproductive wealth, artifically skewing it against the productive areas.
To fix this there needs to be more integration, more migration, less protectionism, more restructuring.
I believe in the virtue of waste as health indicator, much like the fanciful plumage of the birds of paradise.
in geopolitical matters, this waste is manifest in maintaining a costly ostentatious military. You can clearly
see that the credible european states are Great Britain and France. Coupled with Germany (banned to do so)
as an economic powerhouse this comprises the core of europe. everything else is due for a downsize.
Time to sell some looted art and heritage buildings and head back to more productive work.
As the wider equity market declines, PM prices will follow for while until the supply/demand metrics correct. I can only hope silver would decline so I can back my truck up to my dealer and load up! Silver supply is tightening and with countries like China subsidizing the gold and silver purchases to it's citizens as it prepares for the next leg down, it doesn't take a rocket scientist to figure out that any decline in PM prices will be very temporary.
Good! Let the ZOMBIE BANK starve rather than throwing more QE-stylee-human-flesh chum at it!
You can't make a human out of a zombie, but zombies are exclusively made out of humans. It's called DENATURING or some such thing.
France at AA is generous.
thanks for a great post. p.s. now that i think about it, that rating was much vaulted wasn't it? too bad the signatures were in disappearing ink.
Pathetic, that every shoe has dropped, the writing is all over the wall (floor and ceiling too), and I can't hear my self think over the fat women singing, but central banks are still trying to 'keep it together'.
I can only think of 2 buy recommendations at the moment, PM (make god damn sure you take delivery!) and FAZ.
Please assume crash positions.
FAZ is certainly the move.
My most recent buy, today, was a Smith & Wesson .45 ACP, Model 1911. It will be fondled as often as my silver.
You could get it silver plated and ask Max Keiser to engrave his signature on it.
atlas shrugged, but bernanke took over; atlas was too much of a bitch. You think bernanke is at his limits? He can prop up the solar system if he wanted to. Now, who wants to bail out Uranus?
(voice of Mr. Ed the Talking Horse)
Fr AA nce
Do the kids get this?
Wilbur?
Have you ever heard of a talking horse?
He's talking his way right into the glue factory.
Thanks for the reminder of the great Mister Ed! Hadn't recalled the famous song in a long time:
http://www.youtube.com/watch?v=WLR4iZJLgc4
A horse is a horse, of course, of course,
And no one can talk to a horse of course
That is, of course, unless the horse is the famous Mister Ed
Go right to the source and ask the horse
He'll give you the answer that you'll endorse
He's always on a steady course
Talk to Mr Ed
People yakkity yak a streak and waste your time of day
But Mr Ed will never speak unless he has something to say
A horse is a horse, of course, of course
And this one'll talk till his voice is hoarse
You never heard of a talking horse?
Well listen to this:
"I am Mister Ed!"
They finally figured out that when you owe a bank 100,000 euros it's your problem. But if you owe a bank 100 million euros, it's the banks problem.
when banks owe 100 billion euros to each other, then you have world economic crisis
Shouldn't you multiply that by at least 100? They repurchased crap that didn't exist for the last several years.
+ synthetic CDO
"They finally figured out that when you owe a bank 100,000 euros it's your problem. But if you owe a bank 100 million euros, it's also your problem."
Just a little amendment there...
And .... If a bank owes you anything it's your problem.
Has anything the EU tried been even remotely sucessfull?
Seems allt he plans get touted inth e press as the end of the financial crisis, only to come back to the headlines days and weeks later as they all come unspooled...
Who are they trying to fool?
Everyone. Themselves, included.
Yep. And don't ya get it yet? This is a human failure. Label it as 'systemic' if you prefer but the fact is that this is precisely what has always, and WILL always happen when power is placed in the hands of to few.
The very concept of world government and specifically consolidation ( taxation) at our Federal level ought to be the turn off of the century.
Stupid, misinformed, and ignorant 'illene' Loves to rally for more of this suicidal bullshit. Leftist bullshit leads to lower standards of living 'on a long enough timeline'.
PERIOD.
Call it 'science', call it math, call it whatever you prefer. The FACT is that freedom FROM government benifits individual humans.
It's not rocket science.
It's truth.
Smartest thing I've read in a long time.
Euro SOARS on anticipation of another hopium wedgie of cash
(yes that makes as much sense as the reality!)
I'm certainly glad our Dexia 11/04/11 RON paper reached maturity.
You can only polish a turd so much. Someone will bite it another day.
Adieu France.
Don't worry, Bove says our banks will be fine in the stress test. Sooooooo, sell everything? He's like Costanza, if every instinct he has is wrong, then the opposite must be right.
http://www.cnbc.com/id/45408945
King Albert II Go and tell your master that we have been charged by God with a sacred quest. If he will give us food and shelter for the night he can join us in our quest for the Holy Grail.
Taunting French Guard Well I'll ask him, but I don't think he'll be very keen. Ah, he's already got one, you see!
King Albert II What?
Sir Gallahad He says they've already got one!
King Albert II Are you sure he's got one?
Taunting French Guard Oh yes. It's very nice!
Monty Python & The Holy Grail (except the king was Arthur, not Belgium's Albert II)
Monty Python +1
Holy Grail +1
Originality +1
Sorry, only +1 button.
Q: What is your name?
A: Sarkozy.
Q: What is your quest?
A: Sta-beel-i-tee of ze Euro and of ze bahnks.
Q: What is your favorite color?
A: Yellow. No, blue, um.... GREEN! AAAAaaaaahhhh!
In other news, Van Rompuy dismissed these developments as "only a flesh wound."
Tahrir Square rages on: http://www.ustream.tv/channel/live-from-tahrir-square
For some reason, I think they're beyond worrying about pepper spray and I can't seem to locate the peoples library anywhere.
I wonder if they're having a general assembly meeting tomorrow and what's on the agenda.
I'll take Tahrir Square for 100$ please Alex to block.
Just need China to do their bullsh*t PMI fudge get a smallish rally so I can fix a index short. Looks like this market is getting ready to have it's guts fall out.
ES just dumped. 1168
Ouch.
Stand still, this is going to hurt a bit.
NDX taking out 2200 for the final time?
I wrote you a comment and tgat bitch Tyler erased it.
http://m.smh.com.au/national/secret-document-found-in-a-gutter-20111117-...
A SECRET booklet describing Barack Obama's Australian schedule down to the minute, as well as the breakdown of his security convoy and the mobile numbers of dozens of senior US and Australian officials, was found by the Herald lying on a Canberra street yesterday morning.
The loss, a significant and hugely embarrassing security slip-up, will leave a sour final note to what was an otherwise positive two days for the Gillard government.
The booklet, Overall Program and Orders of Arrangements, for the US President's visit, was found by this reporter in a gutter about 100 metres from the entrance to Parliament House.
The article does not make any assumptions as to the ownership of the booklet.
I think it's Mossad, hunting for opportunities to engineer a false flag on Iran.
What do you think?
but obummer is a mossad asset...
"we're all mossad assets now."
and when Israel is gone ... who will you argue is conspiracist-in-chief then? And I ain't no 'Rothschild' ..... keep doing Putin's work .....
Most well-off Israelis have obtained EU passports for themselves and their families, as they do not expect Israel to survive past about 2020 or so. Many can obtain these thanks to ancestors born in Europe. Many Jews don't hesitate to even get a German passport, as their ticket out of Israel when the time comes.
A large number of the Russian-speakers who had a Jewish ancestor, who emigrated to Israel in the 1990s, have already gone back to Russia or their other home countries.
Some of the poorer Israelis who have EU citizenship come to Europe to get health care and social benefits they can't get in Israel, a very unequal society, America style, big gulf between rich and poor, middle class getting destroyed.
If you read radical Israeli journalists like Barry Chamish (who nearly was murdered inside Israel), they speak of scandals that the 'Holocaust lawsuit settlement monies' held by the large organisations, are not trickling down to the actual World War II survivors in Israel, many of whom still live in great poverty.
Such radical Jewish and Israeli journalists also present a view that the ultimate purpose of Israel is really that of long-term destruction of spiritual Judaism, as a joint project of Western oligarchs and atheist Jews. The theory is that Israel helps harm Judaism, partly by helping to drag the name of Jews through the mud via the misconduct of the Israeli state.
This was the prediction of non-Zionist Jewish leaders long ago as they tried to fight the rise of Zionism from within Judaism. Actually, before 1930, most Jews were non-Zionist. Most of the Jews killed during World War II were religious and intrinsically non-Zionist Jews.
According to non-Zionist Jews, the Israeli state clearly violates many of the traditional rules of Judaism (Never seize land from anyone; never try to establish a Jewish political state without God's approval; avoid doing things that make non-Jews dislike Jews.)
Here in Belgium we have a great many Jews in Antwerp who are non-Zionist, and there are many in New York City as well. But you don't see them much in the media. They tend to stay quiet - traditional Jews don't try to 'convert' anyone - and feel it's somewhat hopeless now to try to express their position to the wider world.
Isn't that all a little optimistic?
I mean, who wants to claim any part of this shit?
(chirping Moon Cricket)
Now, *that's* thinking outside the box!
I hope this does affect the price of chocolate. Damn! I gotta tell my mom
I thought Dexia was already bailed out.
libertarian86.blogspot.com
I think we better open a probe into this.
what a tangled web we weave when we first try to deceive
"Belgians fear the EUR90bn deal is 'not feasible' as it stands (with a Belgium 60.5%, France 36.5%, and Luxembourg 3% weighting)."
;-)
Da carnivores, are a comin hooomah, ta rooosta!
"Why don't you tell me what it's all about?"
- Michelle Pfeiffer
Coolio's Gangsters' Paradise
"Perhaps the simplest way (and cheapest) is outright short France credit" - Original
"Perhaps the simplest way (and cheapest) is to buy some physical precious metals" - Corrected.
There, fixed it for ya.
How is it that this qualifies as newsworthy?
Dexia was dumb enough to get "burned" by Bernie Madoff
Should we be shocked dat dey has gots problems wit their Casino Bill?
Because our US Federal Reserve bailed out Dexia the first time they looked like they were going to blow up the world. What happens if they can still blow up the world the second time around?
To answer your question....is to respectfully disagree with your notion that the construct that they've engineered is a broken, but repairable one.
If that's what you believe....then so be it and I won't try to dissuade you from abandoning your beliefs.
I'm simply saying that their ponzi construct is broken and beyond repair. I hope the people of this planet will realize that this game has been run on them for centuries and that it's degraded to a point where the only viable option is for it to "blow up"..."burn down"....however you wanna term it.
The Puppeteers seek to massage and manage things to salvage their monopoly on their "human farming".....they bring us both, catastrophic Deflation and Inflation in order to corner the market on their monopoly. The "Tax Exempt Foundations" and Corporations are their enablers....manipulating the minds of their livestock with fear based propaganda.
The traders that come here feel they are above this and so...so clever. They are busy with infighting like clueless economists about what's next on the horizon....Deflation?...maybe Inflation? It's just plain silly. It reminds me of the left/right political arguements where Democrats and Republicans feel it important to "hash out" the issues.
The Slave Masters have us all locked into our Stockholm Syndrome....believing that they will rescue us always from maddening volatilty....and bring us sticky prices and price stability. Of Course behind the scenes they are conjuring ways to instigate this roller coaster madness. They want you to "want" them...They need you to "need" them. If people can't wake up to this....the umbilical cord will remain forever....and your slavery is the byproduct
It looks as silly as pre-teens pledging their vampire allegiance to "Team Edward" and "Team Jacob"....it passes the time perhaps, but generates no substantial outcome of any value.
Save the Banks? I think not....the banking cartel must be killed
No, I think I've got it right.....it needs to blow up and burn down.
"it needs to blow up and burn down."
Not to argue over semantics but "I think the only way to remove the yoke of tyranny from us is to do what we can to help our neighbor while it burns and after it finishes burning down."
There is little chance it wont blow up. Better set pen to paper and start writing a narrative entitled HOW STUPIDITY AND GREED RUINED PROSPERITY. If you don't write it the historians will screw it up.
This just in: Collapse delayed due to Thanksgiving.
They can't get the unions on board, maybe they can have some effect anyway?
http://www.joc.com/portsterminals/occupy-movement-calls-shutdown-west-coast-ports
The power of Zerohedge.
ES_F on low of session.
New highs on USDX and Treasuries tomorrow.
The Thirst for our paper is unquenchable.
Because the U.S. Consumer cannot be stopped.
"Because the U.S. Consumer cannot be stopped."
SNAP or WIC?
You can have a jobless recovery, did you get the memo?
True. But the patterns are there. Robo is right in regards to the money flow.
The power of ZIRP is diminishing. Trade accordingly. I hate this shit too. EBT Day here is a spectacle. And I can tell you that FLOTUS and her anti-obesity thingy is a farce when you see what kind of shit the EBTers are buying.
TaTaTaTa....True Dat!
I can hardly wait for all the "un-washed mass consumers" to trample themselves on Black Friday
The Paper Rocks On!
Word.
Retail sales will not disappoint this season.
How are you playing that little nugget of wisdom and how much are you betting on it?
I've got March puts on XRT and Lulu, that's how I'm betting it.
We operate on a different level here:
http://www.zerohedge.com/news/disclaimer
If I was to disclose any hard earned trade information it will be in on of my posts. Cloaked as a casual comment so follow along carefully and you will be handsomely rewarded.
You have a very familiar writing style for a 5 week old account.
Austerity for you, pay that Jew confetti back.
You do know those are Trav's words right?
Oh, and if ZH is doing the gift exchange this year for it's most valued contributors I'm looking for the following:
http://www.tacgearstore.com/condor-crossdraw-vest-p-168.html
Color OD, Size XL.
thx
I like when gifts just show up in the mail.
What fracking world do you live in? The Fed buys half the fracking treasury auctions! Wake up Frackin numbskull. You have been on here to long not to understand this game of the Fed and Treasury dance of theives! Frack you!
Like any addict they cannot stop.
Like any addict they will be forced to stop or the country will die.
American exceptionalism is not how many igadgets one has or how many Coach bags.