"Dexia's Funeral Will Be Announced On Sunday" As "Weakest Link" Slovakia Prepares To Bury The Euro

Tyler Durden's picture

A few days ago we mocked the market's naive belief that a loose union of 17 different countries and hundreds of separate political organizations, each torn by thousands of unique interests and lobby groups, can all agree unanimously in the pursuit of the common monetary (read: banker) good, over that of their own people. Yet that did not stop stocks from enacting the second weekly massive short covering squeeze, in 3 weeks, purely on hype, rumors, innuendo and lies. And just like the last time the market soared by nearly double digits in a few short days, only to plunge when hopes of a quick resolution were mercilessly dashed, Monday has all the makings of another epic risk off day. Because while all it takes is a rumor (of a plan for a plan) to start a squeeze, we are about to get some very nasty actual events which will demand immediate and forceful intervention by the powers that be, something which Europe (and the US) has proven is virtually impossible. The events in question are, as Reuters reports, that i) "Dexia's Funeral Will Be Announced On Sunday" and, as Bloomberg reports, that ii) Slovakia’s ruling Freedom and Solidarity party won’t back the overhaul of the European bailout mechanism after Prime Minister Iveta Radicova rejected the party’s conditions for approval, a lawmaker said. Said otherwise, bonds are currently thanking their lucky stars the bond market is closed because not only will Europe have to deal with the headline risk that the weakest link in Europe, the tiny country of Slovakia, can scuttle the entire second Greek rescue operation, and thus, lead to the expulsion of Greece from the eurozone following its bankruptcy, but this will have to take place as Europe fights the stem the contagion resulting from the collapse and nationalization of the first Greek bank, which nobody, nobody, could have foreseen.

First, on Dexia via Reuters:

France and Belgium are expected to finalise plans this weekend to break up Dexia, which helps finance hundreds of towns in both countries and became the first European bank to fall victim to the euro zone crisis.


Dexia, whose board is likely to meet on Sunday, was forced to seek government help earlier this week after a liquidity crunch hobbled the lender and sent its shares into a tailspin.


The bank's implosion has added to investors' worries about the solidity of European banks and has coincided with increased European Union talk about coordinated action to recapitalise banks across the continent.


The burden of bailing out Dexia also prompted Moody's to warn Belgium late on Friday that its credit rating could fall.


The ratings agency also cited the prospect of higher funding costs and weak economic growth as reasons for putting Belgium's Aa1 government bond ratings on review for possible downgrade.


France and Belgium have guaranteed Dexia's financing, paving the way for a new rescue for the bank, which is struggling to wind down billions of euros in toxic assets accumulated during an overambitious expansion plan.


But there were signs that the details of the rescue were proving troublesome, as a Dexia board meeting originally scheduled for Saturday slipped back to Sunday.


Still, a source close to the talks was confident the bank's future would be determined before the opening of markets on Monday morning.


"The need to rescue Dexia is symbolic of the uncertainty that characterises the banking sector," said Eric Galiegue, president of Valquant, an independent research firm. "Who would have imagined that a bank so linked with European construction would end up being dismantled?"
"Dexia's funeral will be announced on Sunday," the source said.

Summarizing the above: nobody has any clue what the proper response here is nor how the market will react.

And as for the second key event just unveiled...

Slovakia’s ruling Freedom and Solidarity party won’t back the overhaul of the European bailout mechanism after Prime Minister Iveta Radicova rejected the party’s conditions for approval, a lawmaker said.


The party, known as SaS, insists its three coalition partners agree to two conditions before it will back the enhancement of the euro region’s bailout fund, the European Financial Stability Facility, in a parliamentary vote Oct. 11, said Jozef Kollar, head of SaS’s parliamentary caucus. “If the solutions we have put forward aren’t accepted then we will not vote for the EFSF,” Kollar said in a debate on state Slovak Radio today.


Slovakia and Malta are the only countries that haven’t yet ratified the key element in the European Union’s plan to prevent the region’s debt crisis from spreading. The Slovak row risks sinking the EU plan, which needs the unanimous consent of all 17 euro members to come into force.


SaS is calling for the creation of an inter-party committee that would have a right to veto individual EFSF disbursements. It is also demanding that Slovakia doesn’t participate in the European Stability Mechanism, a permanent rescue vehicle set to come into force in 2013. SaS will negotiate “until the last minute” with its coalition partners, according to a statement posted on the party’s web site today.


Smer, the largest opposition party, has said it won’t support the EFSF overhaul unless the government steps down.

For those who are still confused, here is what is going on:

The bailout plan that was proposed in July, and was supposed to be operational by the start of September, has still not been ratified, and now the smallest European country is holding the entire continent, its currency, and frankly the Fed, which will have to step in and bailout Europe, hostage.

In the meantime, the first actual core bank casuality is about to go 6 feet under, and unleash a falling house of cards of unpredictable consequences, which will likely make the "fear and loathing" chart presented previously double in a very short time.

And in this environment, where the decisionmakers in Europe are objectively about 2 years behind the curve, are paralyzed into inactivity and torn asunder by warring political parties, the market actually believes that some actual "solid" policy intervention can about to take place?


Oh yes, "Dexia is fine"... The stress test (the second one) said so.

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Caviar Emptor's picture

This is clearly the fault of evil speculators. 

And btw, Tyler, Slovenia and Slovakia are 2 different places. 

GeneMarchbanks's picture

Slovakia is the one although I'm sure Slovenia can't afford this either but just do what they're told...

Caviar Emptor's picture

Ahh, Slovenia, how we pine for your shores (and money)

GeneMarchbanks's picture

Northern Adriatic. Nothing special...

Grimbert's picture

We drove to Croatia 2 summers ago. We were driving past Trieste and the kids knew we were coming up to the border. It said 'welcome to Slovenia'. Quote of the holiday (after driving through 6 countries already): 'I've not even heard of this country'.

It took us half an hour to get to the Croat border, and we were only in the country that long because we had to avoid buying a 6-month vignette to use 10 miles of motorway.

frenchie's picture

you must be american right ?

Cynical Sidney's picture

somebody please remind me again, why are we talking about slovenia? tyler said nothing of slovenia? slovenia was among yugoslavakian states that declared independence when ussr went kaput back in '91. slovakia was the one that broke away from czechoslovakia afterwards. tyler's made a great point about slovakia being a small country; when it comes to negotiating bankster bailouts, the smaller you are, the more crazy and reckless you'd have to be.

"Europe fights the stem the contagion resulting from the collapse and nationalization of the first Greek bank, which nobody, nobody, could have foreseen."
if you have the common sense to foresee that bankrupt TBTF companies will be nationalized, you are a 'nobody', your voice will never be heard, your opinions will not count, as banksters and their political puppets continue to divert public money from more bailouts.

"the smallest European country is holding the entire continent, its currency, and frankly the Fed, which will have to step in and bailout Europe, hostage."

why is slovakia vilified when it's the banksters who are holding everyone hostage. praises goes to slovakia, it's fighting for its rights it's doing what's right.

disabledvet's picture

didn't say what the conditions were for saying yes. also the "Czech" part is not part of the euro-zone as it has it's own currency...the "koruna"... though it is a member of the EU. Interesting history as well. I've never been to Prague but I hear it's quite beautiful. It was a big location for the information age folks after the Soviet Union collapsed. I imagine that still is true.

Troll Magnet's picture

parts of prague are indeed quite breathtaking but other parts feel rather desolate and you can tell they still haven't fully recovered from wars. definitely worth checking out though.

Going Loco's picture

"parts of prague are indeed quite breathtaking but other parts feel rather desolate and you can tell they still haven't fully recovered from wars. definitely worth checking out though."

Sounds like New York city.

FeralSerf's picture

<<"the smallest European country is holding the entire continent, its currency, and frankly the Fed, which will have to step in and bailout Europe, hostage.">>

Speaking of not knowing anything about geography, since when is Slovakia the smallest European country?  What about Malta and Luxembourg, both EU countries?   Or Lichtenstein, Andorra, San Marino or Monaco?  They're Europe too, but not EU.

defencev's picture

 Not only that. The very idea that Slovakia stops anything is an absolute nonsense. The author seems to be obsessed with various Armagedon-type scenarios none of which is going to happen. Crawl back to your cave, count your Gold and keep quiet:nothing drastic is going to happen.

macholatte's picture

The Mouse that Roared ..... or in this case.... got the biggest bribe for its vote.

Yes, there's a very big bribe being negotiated. The deal will close, the can will be kicked and the stubborn folk from the arguably smallest, insect size country will get a huge payoff.


As I grow older, I pay less attention to what men say. I just watch what they do.
Andrew Carnegie


erg's picture

Newton's 2nd law of thermodynamics with a Chopin chaser.

Karl Tashjian's picture

A contrarian trolling ZH. Fascinating!


I think the truth lies somewhere between you and Tyler, defencev.

matrix2012's picture

And don't miss the VATICAN either...no matter how holy and religious it may look like, it has all the functions and wealth as a state except the uniformed army...and banking center as well :D

Michael's picture

It would take too long for me to explain to you how I knew this day would come. I'm still looking for the original thread where I made this prediction a couple weeks earlier.

"October 10th, 2011 is the stock and bond market day of total world market devastation. Black Monday and Black Tuesday next month beginning October 10th will be market devastation of biblical proportions. You may think the plunges in this September are the big one, you are wrong, that's next month. Yes it is going to happen sooner rather than later."


Michael's picture

Spread the wealth, right?

President Hu Jintao is having to stare down claims that human-induced climate change is an elaborate American conspiracy.

Read more: http://www.smh.com.au/world/chinese-sceptics-see-global-warming-as-us-conspiracy-20111007-1ldl1.html#ixzz1aGLJwhS8 Chinese sceptics see global warming as US conspiracy John Garnaut

October 8, 2011

Read more: http://www.smh.com.au/world/chinese-sceptics-see-global-warming-as-us-conspiracy-20111007-1ldl1.html#ixzz1aGKes4Bw

ISEEIT's picture


I've been calling out the globalist bullshit from day one. Think central banking is a scam? Global warming/ climate change is the cherry on top, the final nail in our coffin. These sick fucks truly do desire a total lockdown prison planet. Think I'm crazy? Fine, get on the train then.

matrix2012's picture

WHO has the Sydney Morning Herald? Oops...just recall it, the famous NEWS Corporation, or even more famous name, Rupert Murdoch. I'm still much amazed with their sophisticated phone investigation :D

o2sd's picture

Wrong, but thanks for playing. SMH is owned by Fairfax, not News. Scumbags yes, but a different group of scumbags.

RSloane's picture

I'll be holding you to it, Michael. Until tomorrow, +1 for not backpeddling and putting your call out there.

Grimbert's picture

*ouch* my son was 12 and is English - these new countries will keep popping up with very similar names - slovenšcina vs. slovencina.

I can't get the 'v' on top of the c.

buzzsaw99's picture

'I've not even heard of this country'.


You read that and thought he was American? :roll:


Watch at 2:56 and learn how an American would say that:


Bob's picture

Exactly.  WTF is a "vignette" or a "motorway," anyway?

buzzsaw99's picture

i suspect vignette is some kind of salad dressing.

UP Forester's picture

I thought it was a short story....

ISEEIT's picture

That or Slovakian slang for va jay-jay?

DeadFred's picture

That there balsanic vignette can be right tasty stuff.

Cynical Sidney's picture

that's balsamic vinaigrette, means vinegar with added salad oil; vignette are old portraits of people found in books, with its background color slowly fading into the pages; in creative writing, vignette is a 'defining picture'.

Grimbert's picture

Yeah, that would be the type they sell at border crossings.

bartek's picture

Motorway - a road for motorcycles.

legal eagle's picture

Euro trash -- so fucking arrongant.  Can you Frenchie, name every US state and every capital of every US state?  I did not think so.  Can you name the US rivers, the great lakes?  No, again. hmm.  How about the Regions of Russia?  Do you know where Turkmenistan versus Tartarstan is? What is the capital of Tartarstan and why is it famous?  I see, no again.  I cant help it your forefathers, who invented the inferiority complex know as the Nepolean complex (which you obviously have), lost so much of your land that what is left is so small it is hard to forget, even when we try.

I happened to have lived in Switzerland, and happen to know all of the countries in Europe, but that is because I lived there fucker.  Europeans tend to complain that Americans do not know geography, my experience is they know just as much geography as Euro-trash, just different geography.  And the French with their harry women and small dicks who know the least seem to complain the most.

Motley Fool's picture

Ignorance doesn't have a nationality.

Lord Welligton's picture

Though it apparently has a "Legal Eagle".

Idiocracy's picture

'harry' women?  Mr Eagle, to what law school did you go?  

legal eagle's picture

Caught a typo, wow arent you brilliant!

Lord Welligton's picture

Are you old enough to be on this site?

Where's your Daddy?

Troll Magnet's picture

legal eagle,
i'm american and i can tell you that i will NOT be able to name capitals of all 50 states or many great lakes of ours, etc. i'm not proud but many americans are provincial if not downright stupid. how else can you explain bush-bush-obama? and judging by ron paul's 10% support, i am pretty confident that at least 90% of americans are indeed fucking dumb. again, not proud but it is what it is.

maxw3st's picture

Well said Troll Magnet. It's good to see I'm not alone. I probably can name all 50 states and their capitals as well as the great lakes, most, if not all, of the countries in Europe, and the same for Africa. But, I grew up moving around a lot and have never had the benefit of being able to become provincial. The rest of your statement is right-on. Europeans, by and large, are still as Chauvinistic as they were during the Victorian era and so are no different than the average American in that regard.

When you have a government that spends 30 years dumbing down the education system you are going to get things like Bush-Bush and complete ignorance as to what Ron Paul's message is or what its roots are. The fall of an empire is a sad thing-when it's where you live.

Dugald's picture

Nah! think you are just sloppy.....

legal eagle's picture

Yes, of course, more euro-trash with a superiority complex.  English I suppose, the worst.  Have you ever heard of dentistry?

buzzsaw99's picture

in the name of the usa, please stop. how many countries do you intend to insult with your redneck stereotypical bs?

Lord Welligton's picture

Apparently as many as his ignorance allows.

However, I am Irish.

As was Wellington.

Though that would be way beyond the education of the "Legal Eagle".

BurningFuld's picture

I'm from Canuckistan and the capital is Beer. Any questions?

UP Forester's picture

Nah.  Labatt Blue, as long as you're not in Utah.

3 point beer sucks, eh?