Silvio Berlusconi resigned on Saturday to make way for an emergency government Italians hope will save them from financial ruin as thousands of jeering protesters shouted "clown, clown" and toasted the end of a scandal-plagued era.
List of Scandals
• Lodo Mondadori: bribery of judges (statute of limitation acquittal)
• All Iberian 1: 23 billion Lira bribe to Bettino Craxi via an offshore bank account code-named All Iberian (first court sentence: 2 years 4 month jail; appeal: acquitted since the statute of limitations expired before the appeal)
• Lentini affair: false accounting (not guilty because of changes in the false accounting law)
• Propaganda Due (P2) masonic lodge trial: false testimony (guilty but amnesty applied)
• Macherio estates: false accounting (amnesty applied following the 1992 fiscal remission law)
• All Iberian 2: false accounting (acquittal following the new law on the false accounting passed by the Berlusconi government)
• Sme-Ariosto 2: false accounting (acquittal following the new law on the false accounting passed by the Berlusconi government)
• Sme-Ariosto 1: charge for the sale by IRI, bribes to judges (first instance court sentence)
• Bribery of the Guardia di Finanza (first sentence: 2 years 9 months jail; appeal: statute of limitations for 3 charges, acquittal for the fourth (not proven)
• Medusa Cinema company: false accounting (acquitted since too rich for being aware of such small amounts)
• Sme-Ariosto 1: bribes to the judge Renato Squillante
• Macherio estates: embezzlement, tax evasion, another false accounting (the statute of limitations expired before the first court verdict for one charge; and before the appeal court for the second one)
• Television rights: false accounting, tax evasion, embezzlement
• Fininvest financial statement: false accounting and embezzlement (archived thanks to the new law on the false accounting passed by the Berlusconi government)
• Fininvest consolidated financial statements: false accounting (archived thanks to the new law on the false accounting passed by the Berlusconi government)
• Agreement on the division of publicity between RAI and Fininvest televisions
• Traffic of drug
• Tax bribery on the Pay-tv
• Collusion into the 1992–1993 slaughters
• Mafia collusion, together with Marcello Dell'Utri, money laundering
• Bribe to the lawyer David Mills: corruption to influence a judiciary sentence
• Corruption of senators of the Romano Prodi government camp (procedure transferred from Naples to Rome)
• Paying an underage girl (Karima el-Mahroug) for sex and abuse of office relating to her release from detention
Former European Commissioner Mario Monti is expected to be given the task of trying to form a new administration to face a widening financial crisis which has sent Italy's borrowing costs to unmanageable levels.
More than a thousand demonstrators waving banners mocking Berlusconi flocked to the president's residence at the Quirinale Palace as the motorcade carrying the billionaire media entrepreneur, who has been Italy's longest serving prime minister, entered.
The crowd grew so unruly that Berlusconi was forced to leave (scurry away) secretly via a side entrance and return to his private residence.
Cheers broke out when they heard that Berlusconi had resigned and the square broke out into a party atmosphere. People sang, danced and some broke open bottles of champagne.
An orchestra near the palace played the Hallelujah chorus from Handel's Messiah. "We are here to rejoice," one said.
Demonstrators chanting "resign, resign, resign" also gathered outside the prime minister's office and parliament, heckling ministers as they walked between the two buildings.
After the resignation, hundreds shouting "Jail, Jail, Jail," moved from the presidential palace to Berlusconi's residence to continue the noisy celebrations below his windows.
With a public debt of more than 120 percent of gross domestic product and more than a decade of anemic economic growth behind it, Italy is at the heart of the euro zone debt crisis and would be too big for the bloc to bail out.
Berlusconi, fighting an array of scandals and facing trials on charges ranging from tax fraud to paying for sex with an under-aged prostitute, had been under pressure to resign for weeks as the market crisis threatened to spin out of control.
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Showing posts with label Eurozone. Show all posts
Showing posts with label Eurozone. Show all posts
Saturday, November 12, 2011
Tuesday, October 4, 2011
What do the Euro and the Titanic have in Common? (Answer: Large, Lumbering and Blind to Danger)
European countries with debt ratings below the top Aaa level may see reductions in their rankings, Moody’s Investors Service said.
“All but the strongest euro-area sovereigns are likely to face sustained negative pressure on their ratings,” Moody’s said in a statement. “Consequently, Moody’s expects fewer countries below Aaa to retain high ratings.” It added that “there are no immediate pressures that could cause downgrades for Aaa-rated countries.”
The statement came after the company yesterday cut Italy’s rating for the first time since 1993 on concern the government will struggle to reduce the region’s second-largest debt amid chronically weak growth. Italy was cut three levels to A2 from Aa2. Standard & Poor’s downgraded Italy on Sept. 20 for the first time in five years.
European stocks dropped for a third day, the longest losing streak in four weeks, as policy makers signaled they may renegotiate terms of Greece’s bailout, deepening concern about the impact of the debt crisis. The benchmark Stoxx Europe 600 Index fell 2.8 percent to 217.46 at the 4:30 p.m. close in London, the lowest level in a week.
European finance chiefs meeting this week considered “technical revisions” to the second Greek bailout, Luxembourg Prime Minister Jean-Claude Juncker said yesterday, fueling concern bondholders may have to take bigger losses on the nation’s debt.
“All but the strongest euro-area sovereigns are likely to face sustained negative pressure on their ratings,” Moody’s said in a statement. “Consequently, Moody’s expects fewer countries below Aaa to retain high ratings.” It added that “there are no immediate pressures that could cause downgrades for Aaa-rated countries.”
The statement came after the company yesterday cut Italy’s rating for the first time since 1993 on concern the government will struggle to reduce the region’s second-largest debt amid chronically weak growth. Italy was cut three levels to A2 from Aa2. Standard & Poor’s downgraded Italy on Sept. 20 for the first time in five years.
European stocks dropped for a third day, the longest losing streak in four weeks, as policy makers signaled they may renegotiate terms of Greece’s bailout, deepening concern about the impact of the debt crisis. The benchmark Stoxx Europe 600 Index fell 2.8 percent to 217.46 at the 4:30 p.m. close in London, the lowest level in a week.
European finance chiefs meeting this week considered “technical revisions” to the second Greek bailout, Luxembourg Prime Minister Jean-Claude Juncker said yesterday, fueling concern bondholders may have to take bigger losses on the nation’s debt.
Saturday, September 17, 2011
Eurozone stagnations.....
Europe projects an image of “ongoing conflict” between national governments and the central bank, hampering efforts to put the economy on a sounder footing, Geithner said at a banking conference in between euro meetings.
“Your financial challenges in Europe are eminently in your capacity to manage financially, you just have to choose to do it,” he said.
Echoes of that appeal came from ECB President Jean-Claude Trichet, six weeks from the end of an eight-year term as the overseer of euro interest rates.
“Our permanent message is of course to be ahead of the curve,” Trichet told reporters. “All that I heard goes in this direction. But the problems are not words, the problems are deeds.”
The ECB was in the forefront again this week, joining other major central banks in offering dollar loans to ease a liquidity crunch that had confronted European banks with the highest costs for obtaining the U.S. currency in almost three years.
Finance chiefs stuck by the view that commercial banks have enough capital to ride out the turbulence that has driven the bonds of Greece, the epicenter of the crisis, to less than half their nominal value.
Trichet hailed an accord between governments and the European Parliament that will tighten the euro area’s economic management and make it easier to impose sanctions on countries that overstep the budget-deficit limit of 3 percent of gross domestic product.
The new rules, to take effect by Jan. 1, mark a “substantial improvement,” Trichet said.
“Your financial challenges in Europe are eminently in your capacity to manage financially, you just have to choose to do it,” he said.
Echoes of that appeal came from ECB President Jean-Claude Trichet, six weeks from the end of an eight-year term as the overseer of euro interest rates.
“Our permanent message is of course to be ahead of the curve,” Trichet told reporters. “All that I heard goes in this direction. But the problems are not words, the problems are deeds.”
The ECB was in the forefront again this week, joining other major central banks in offering dollar loans to ease a liquidity crunch that had confronted European banks with the highest costs for obtaining the U.S. currency in almost three years.
Finance chiefs stuck by the view that commercial banks have enough capital to ride out the turbulence that has driven the bonds of Greece, the epicenter of the crisis, to less than half their nominal value.
Trichet hailed an accord between governments and the European Parliament that will tighten the euro area’s economic management and make it easier to impose sanctions on countries that overstep the budget-deficit limit of 3 percent of gross domestic product.
The new rules, to take effect by Jan. 1, mark a “substantial improvement,” Trichet said.
Wednesday, July 6, 2011
Odd that Brazil (former Portuguese colony) has a higher credit rating than Portugal; how times change!
Somehow I think the European Commission President Jose Manuel Barroso needs a) to get his facts correct. One rating agency, Fitch, is majority held by a French Company. Yes, S&P and Moody’s clearly American; and b) the point of a downgrade is to make it more difficult to issue debt.
The cost of insuring all weaker euro zone states' debt against default rose after Moody's announced the downgrade of Portugal to junk on Tuesday.
German Finance Minister Wolfgang Schaeuble called for limits to be placed on the rating agencies' "oligopoly."
The European Union's executive body is drafting proposals to regulate rating agencies; there has been political talk, but no action so far, about creating a European agency.
Michel Barnier, the EU official in charge of regulation, said later he could examine how to suspend the rating of countries that are getting bailout funds from the EU and International Monetary Fund. These are Greece, Ireland and Portugal.
Moody's said Portugal may need a second round of rescue funds before it can return to capital markets, just as European governments and banks are haggling over a second 120 billion euro ($172 billion) bailout for Greece, which has a much higher debt ratio.
Ireland, the other euro zone country to have received a bailout, said on Tuesday it may have to make additional spending cuts next year to meet deficit reduction targets in its 85 billion euro bailout plan due to an economic slowdown.
A Reuters analysis last week found that Dublin may also need a second bailout because it is unlikely to grow fast enough to make the envisaged full return to market funding in 2013.
Moody's cited the EU's crisis management, and specifically the attempt to make private creditors share the burden of all future rescues, as one reason for its steep downgrade.
The demand that banks and insurers share the risk is driven by growing public hostility in north European creditor nations to any further bailouts for south European states seen as having lived beyond their means.
Rating agencies have warned they would be likely to treat any "voluntary" rollover of Greek bonds as a distressed debt exchange and declare it, at least temporarily, to be a selective default.
French banks have offered a plan under which banks would roll over about half of Greek debt that matures in 2011-14, putting another 20 percent into a "guarantee fund" of zero-coupon AAA bonds, and cashing out the remaining 30 percent.
German Deputy Finance Minister Joerg Asmussen put Berlin's alternative proposal for a debt swap extending existing bonds' maturities by seven years back on the table on Wednesday, even though the European Central Bank has warned against it.
Underlying the debate is an increasingly prevalent view in financial markets -- disputed publicly by EU governments -- that Greece, and possibly also Portugal and Ireland, will have to restructure debt sooner or later and force significant losses on bondholders.
The more widespread that assumption becomes, the harder it will be to negotiate further official funding for Greece.
The IMF's new managing director, former French Finance Minister Christine Lagarde, warned the crisis could be comparable to the collapse of Lehman Brothers nearly three years ago unless action is taken to stave off a Greek default.
"It goes to show that this whole crisis isn't over just yet. Even if they cough up some more money for Greece, and that looks like it's a done deal, it's not over," said Jay Bryson, global economist at Wells Fargo Securities.
"I would think it's bad news for Spain and Italy as well."
The cost of insuring all weaker euro zone states' debt against default rose after Moody's announced the downgrade of Portugal to junk on Tuesday.
German Finance Minister Wolfgang Schaeuble called for limits to be placed on the rating agencies' "oligopoly."
The European Union's executive body is drafting proposals to regulate rating agencies; there has been political talk, but no action so far, about creating a European agency.
Michel Barnier, the EU official in charge of regulation, said later he could examine how to suspend the rating of countries that are getting bailout funds from the EU and International Monetary Fund. These are Greece, Ireland and Portugal.
Moody's said Portugal may need a second round of rescue funds before it can return to capital markets, just as European governments and banks are haggling over a second 120 billion euro ($172 billion) bailout for Greece, which has a much higher debt ratio.
Ireland, the other euro zone country to have received a bailout, said on Tuesday it may have to make additional spending cuts next year to meet deficit reduction targets in its 85 billion euro bailout plan due to an economic slowdown.
A Reuters analysis last week found that Dublin may also need a second bailout because it is unlikely to grow fast enough to make the envisaged full return to market funding in 2013.
Moody's cited the EU's crisis management, and specifically the attempt to make private creditors share the burden of all future rescues, as one reason for its steep downgrade.
The demand that banks and insurers share the risk is driven by growing public hostility in north European creditor nations to any further bailouts for south European states seen as having lived beyond their means.
Rating agencies have warned they would be likely to treat any "voluntary" rollover of Greek bonds as a distressed debt exchange and declare it, at least temporarily, to be a selective default.
French banks have offered a plan under which banks would roll over about half of Greek debt that matures in 2011-14, putting another 20 percent into a "guarantee fund" of zero-coupon AAA bonds, and cashing out the remaining 30 percent.
German Deputy Finance Minister Joerg Asmussen put Berlin's alternative proposal for a debt swap extending existing bonds' maturities by seven years back on the table on Wednesday, even though the European Central Bank has warned against it.
Underlying the debate is an increasingly prevalent view in financial markets -- disputed publicly by EU governments -- that Greece, and possibly also Portugal and Ireland, will have to restructure debt sooner or later and force significant losses on bondholders.
The more widespread that assumption becomes, the harder it will be to negotiate further official funding for Greece.
The IMF's new managing director, former French Finance Minister Christine Lagarde, warned the crisis could be comparable to the collapse of Lehman Brothers nearly three years ago unless action is taken to stave off a Greek default.
"It goes to show that this whole crisis isn't over just yet. Even if they cough up some more money for Greece, and that looks like it's a done deal, it's not over," said Jay Bryson, global economist at Wells Fargo Securities.
"I would think it's bad news for Spain and Italy as well."
Sunday, June 26, 2011
Unsinkable OR practically unsinkable
"We do not care anything for the heaviest storms in these big ships. It is fog that we fear. The big icebergs that drift into warmer water melt much more rapidly under water than on the surface, and sometimes a sharp, low reef extending two or three hundred feet beneath the sea is formed. If a vessel should run on one of these reefs half her bottom might be torn away." -Captain Smith, Commander of Titanic
23 June 2010 the Italian CDS widened to 198! Europe is in an icy fog. Could an AIG or too big to fail be out there under the surface with icy ragged edges about to sink the unsinkable or practically unsinkable Euro? No one seems to be sure because once again of derivatives and some companies having likely insured billions of dollars of European debt. The first strike will be Greece defaulting, second Italy, then the third Spain. Alarms will go off and MayDays out but no one will be able to maneuver in time to prevent another wave of TOO BIG TO FAIL.
The lookout in the bird’s nest, First Mate Ben S Bernanke reported to the pilot deck, “a disorderly default in one of the those countries would no doubt roil financial markets globally. It would have a big impact on credit spreads, on stock prices, and so on.”
So what are we really talking about? No one can actually put a firm number to the actually size but the floor is Italy, Spain, Greece, Portugal and Ireland’s sovereign debt which amount to $616 billion. So not being to outrageous but you could easily have a $6-7 trillion exposure or more! “There’s not any clarity here because people don’t know,” said Christopher Whalen, editor of The Institutional Risk Analyst.
Much like housing bubbles, CDS bubbles where they are known or believed to be must be popped before they get to catastrophic sizes. An orderly Greek default would likely be in the best interest of the market, provided it doesn’t set off a domino effect and that would not be known until we set it in motion.
European banks hold the bulk of direct (cash) exposure to peripheral European borrowers, whereas US banks have little direct exposure. But US banks appear to have written the majority of CDS contracts on peripheral European borrowers, up to three quarters of the total in most cases. The data doesn't tell us who has bought CDS protection on peripheral European borrowers, but it would be reasonable to assume that EU banks have tried to hedge their direct exposures by buying CDS protection from US banks. Therefore if we get to the point where a European borrower restructures its debt you would assume that Europe in general would have an incentive to try and trigger CDS protection payouts, whereas the US would typically want to avoid an event of restructuring because its banks would then potentially have to make big payouts. Guess what? First Mate Ben is working this hard with his European Counterparts.
"And it wasn't until we were in the lifeboat and rowing away, it wasn't until then I realized that ship's going to sink. It hits me there."
-Eva Hart, Titanic Survivor
Investment ideas, shorts on US and EU banks (see CMA spread trends for ideas)
23 June 2010 the Italian CDS widened to 198! Europe is in an icy fog. Could an AIG or too big to fail be out there under the surface with icy ragged edges about to sink the unsinkable or practically unsinkable Euro? No one seems to be sure because once again of derivatives and some companies having likely insured billions of dollars of European debt. The first strike will be Greece defaulting, second Italy, then the third Spain. Alarms will go off and MayDays out but no one will be able to maneuver in time to prevent another wave of TOO BIG TO FAIL.
The lookout in the bird’s nest, First Mate Ben S Bernanke reported to the pilot deck, “a disorderly default in one of the those countries would no doubt roil financial markets globally. It would have a big impact on credit spreads, on stock prices, and so on.”
So what are we really talking about? No one can actually put a firm number to the actually size but the floor is Italy, Spain, Greece, Portugal and Ireland’s sovereign debt which amount to $616 billion. So not being to outrageous but you could easily have a $6-7 trillion exposure or more! “There’s not any clarity here because people don’t know,” said Christopher Whalen, editor of The Institutional Risk Analyst.
Much like housing bubbles, CDS bubbles where they are known or believed to be must be popped before they get to catastrophic sizes. An orderly Greek default would likely be in the best interest of the market, provided it doesn’t set off a domino effect and that would not be known until we set it in motion.
European banks hold the bulk of direct (cash) exposure to peripheral European borrowers, whereas US banks have little direct exposure. But US banks appear to have written the majority of CDS contracts on peripheral European borrowers, up to three quarters of the total in most cases. The data doesn't tell us who has bought CDS protection on peripheral European borrowers, but it would be reasonable to assume that EU banks have tried to hedge their direct exposures by buying CDS protection from US banks. Therefore if we get to the point where a European borrower restructures its debt you would assume that Europe in general would have an incentive to try and trigger CDS protection payouts, whereas the US would typically want to avoid an event of restructuring because its banks would then potentially have to make big payouts. Guess what? First Mate Ben is working this hard with his European Counterparts.
"And it wasn't until we were in the lifeboat and rowing away, it wasn't until then I realized that ship's going to sink. It hits me there."
-Eva Hart, Titanic Survivor
Investment ideas, shorts on US and EU banks (see CMA spread trends for ideas)
Tuesday, June 14, 2011
The little engine that couldn’t!
First the facts. Greek debt amounts to about $380bln or 2.7% of Eurozone total sovereign debt. Greece contributes about 3% to the total Eurozone GDP of $16 trillion. So talk of Greece being the cause of the Euro collapse is a little like the dollar collapsing because Mississippi gets downgraded or defaults. In fact, we have witnessed bigger economic states in the USA default without much effect at all on the greenback…e.g., California and New York to name two.
But that doesn’t mean there isn’t some great trading (ok speculating) to be had -- certainly aided by the capital flight from Greece by Eurozone member banks. More on this shortly.
Some more data. The cost of insuring Greek sovereign debt hit a new lifetime high on Monday (12 June). It now costs €1.6m to insure €10m of Greek debt, a record amount, after the five-year Greek credit default swap jumped 1,600bp. The prices of insuring Ireland and Portugal's debt also hit new all-time highs, according to data from Markit.
On top Greece getting downgraded to CCC, looming quickly is the big sovereign-debt rollover for Italy and Spain. Now, if the debt market locks up, and the global economy falters – then you have about 33% of Eurozone debt in three sovereigns that are struggling with their economies (deficit, employment, debt, negative growth) – things then get very interesting.
A collapse in the euro isn't the only potential catastrophe lying in wait, either. A more immediate concern would be the collapse of a major European financial institution. Any fear of a bank failure will result in another interbank liquidity-and-funding panic.
Figures from the Bank of International Settlements (BIS) show French, German and UK banks have embarked on a mass exodus from Greece, Portugal, Spain and Ireland, in what analysts see as an effort to bolster their balance sheets and conform to new rules designed to protect financial institutions from going bust.
The move is expected to add to tensions in Brussels over how to prevent Greece defaulting on its loans because vital business contracts will cost more to insure.
French banks cut their exposure to Greece from $92bn (£57bn) to $65bn in the last three months of 2010. They also reduced their involvement in Ireland, Portugal and Spain, slicing their total exposure to the four hardest-hit economies by $112bn.
German and French banks held over two-thirds of the Greek government bonds at the end of last year, accounting for 70% of the $54.2bn owned by banks from 24 countries that report to the BIS.
International loans to Greece stood at $161bn at the end of December, down $75bn from a year before.
BNP, which has almost $3 trillion of assets, refused to disclose how much it had reduced its exposure. A spokesman played down its involvement in Greece, Ireland or Portugal, saying that it had no retail operations in those countries.
Of the European banks that are most at risk for Greek default:
* Fortis NV (OTC: FORSY) holds $5 billion in bonds.
* Dexia SA (PINK: DXBGY) holds $4 billion.
* Société Générale (OTC: SCGLY) holds $5.2 billion.
* BNP Paribas SA (NYSE ADR: BNPQY) holds $8 billion.
* ING Groep NV (NYSE ADR: ING) holds $4.6 billion.
* Barclays PLC (NYSE ADR: BCS) holds $6 billion.
* Deutsche Bank AG (NYSE: DB) holds $2.6 billion.
Together, that's a total $35.4 billion in Greek bonds.
There's plenty of opportunity in shorting some of the big European banks and then getting long them after they've taken their hits.
The market is applying a level of pressure well beyond what the Eurozone and European Union (EU) were designed to handle. The Eurozone and the EU are both in trouble.
Change, quick deep structural change is needed now. There could be no better wake-up call than when credit-default-swap (CDS) pricing on Western European states is higher than Eastern European states!
Change = >> Fiscal union, which involves harmonizing aspects of fiscal policy across the euro area, would be a bold move and essentially result in a treasury department for the entire Eurozone.
The euro crisis is just as much underpinned by politics as it is by unbalanced economies, rigid labor and product markets, burst property bubbles and unsustainable public and private debt levels. A Federal Treasury = Fiscal Union for the EU is long overdue.
The alternative – someday – given the lack of fiscal discipline of the EU member states: A Eurozone breakup. The result: widespread series of defaults, bank runs, capital controls and periods during which countries (and their banks) would be frozen out of the markets. It would be extremely messy -- a lot like the 60s & 70s…
To quote the international man of mystery, Austin Powers: “Oops. I did it again, baby!”
But that doesn’t mean there isn’t some great trading (ok speculating) to be had -- certainly aided by the capital flight from Greece by Eurozone member banks. More on this shortly.
Some more data. The cost of insuring Greek sovereign debt hit a new lifetime high on Monday (12 June). It now costs €1.6m to insure €10m of Greek debt, a record amount, after the five-year Greek credit default swap jumped 1,600bp. The prices of insuring Ireland and Portugal's debt also hit new all-time highs, according to data from Markit.
On top Greece getting downgraded to CCC, looming quickly is the big sovereign-debt rollover for Italy and Spain. Now, if the debt market locks up, and the global economy falters – then you have about 33% of Eurozone debt in three sovereigns that are struggling with their economies (deficit, employment, debt, negative growth) – things then get very interesting.
A collapse in the euro isn't the only potential catastrophe lying in wait, either. A more immediate concern would be the collapse of a major European financial institution. Any fear of a bank failure will result in another interbank liquidity-and-funding panic.
Figures from the Bank of International Settlements (BIS) show French, German and UK banks have embarked on a mass exodus from Greece, Portugal, Spain and Ireland, in what analysts see as an effort to bolster their balance sheets and conform to new rules designed to protect financial institutions from going bust.
The move is expected to add to tensions in Brussels over how to prevent Greece defaulting on its loans because vital business contracts will cost more to insure.
French banks cut their exposure to Greece from $92bn (£57bn) to $65bn in the last three months of 2010. They also reduced their involvement in Ireland, Portugal and Spain, slicing their total exposure to the four hardest-hit economies by $112bn.
German and French banks held over two-thirds of the Greek government bonds at the end of last year, accounting for 70% of the $54.2bn owned by banks from 24 countries that report to the BIS.
International loans to Greece stood at $161bn at the end of December, down $75bn from a year before.
BNP, which has almost $3 trillion of assets, refused to disclose how much it had reduced its exposure. A spokesman played down its involvement in Greece, Ireland or Portugal, saying that it had no retail operations in those countries.
Of the European banks that are most at risk for Greek default:
* Fortis NV (OTC: FORSY) holds $5 billion in bonds.
* Dexia SA (PINK: DXBGY) holds $4 billion.
* Société Générale (OTC: SCGLY) holds $5.2 billion.
* BNP Paribas SA (NYSE ADR: BNPQY) holds $8 billion.
* ING Groep NV (NYSE ADR: ING) holds $4.6 billion.
* Barclays PLC (NYSE ADR: BCS) holds $6 billion.
* Deutsche Bank AG (NYSE: DB) holds $2.6 billion.
Together, that's a total $35.4 billion in Greek bonds.
There's plenty of opportunity in shorting some of the big European banks and then getting long them after they've taken their hits.
The market is applying a level of pressure well beyond what the Eurozone and European Union (EU) were designed to handle. The Eurozone and the EU are both in trouble.
Change, quick deep structural change is needed now. There could be no better wake-up call than when credit-default-swap (CDS) pricing on Western European states is higher than Eastern European states!
Change = >> Fiscal union, which involves harmonizing aspects of fiscal policy across the euro area, would be a bold move and essentially result in a treasury department for the entire Eurozone.
The euro crisis is just as much underpinned by politics as it is by unbalanced economies, rigid labor and product markets, burst property bubbles and unsustainable public and private debt levels. A Federal Treasury = Fiscal Union for the EU is long overdue.
The alternative – someday – given the lack of fiscal discipline of the EU member states: A Eurozone breakup. The result: widespread series of defaults, bank runs, capital controls and periods during which countries (and their banks) would be frozen out of the markets. It would be extremely messy -- a lot like the 60s & 70s…
To quote the international man of mystery, Austin Powers: “Oops. I did it again, baby!”
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