The banks in Europe fucked up — betting on Greece like our morons doing God’s work in the US bet on housing.
Assholes!
The bets the banks made went south like some Smokey team pick.
Shocker.
Now the price to insure the moron-bank’s bonds is blowing out. This is causing a massive credit crunch. Anything not nailed down is getting sold (think back to gold losing $300 bucks.) The banks are smart enough to not trust one another. Credit is drying up.
Dexia is Belgium’s largest bank it is French based also.
2008 Redux on a global scale never seen before.
“Credit default swaps on lenders as far afield as China and Australia, countries that until recently seemed immune to the chaos, have doubled in the last two months to levels not seen since the financial crisis.
In Europe, French and Belgian government officials are due to meet on Monday to discuss the crisis enveloping Dexia as speculation mounts about a possible break-up of the Franco-Belgian lender.
Last week, the cost of insuring Dexia bonds hit an all-time high of 900 basis points, nearly double the level just two months ago, meaning the annual cost to insure €10m (£8.59m) of the bonds is £900,000.
“The money ran out in June and what you are seeing now is the beginning of a new credit crunch, except this time it will be truly global, not Western,” said one senior London-based credit analyst.
Dexia, along with other European lenders, has been hard hit by the closure of the interbank lending markets and the continuing unwillingness of investors to buy the bonds of eurozone banks.”
Davos:
With BAC circling the drain, with supposed electronic run on the bank (BAC) halted only by shutting down the website, with more than 40% of U.S. money market funds still tied up in European banks,
Is it time to go to the my bank and yank out my cash?
Or, will the Fed provide enough liquidity, with the European QE plan work, and how scared of a credit market seizure should we be? LIBOR rates are already on their way up. DO TELL!
Just for Smokey. Kyle Bass is in Michael Lewis’s new book. Stands to score big on Greece default.
http://www.businessinsider.com/new-michael-lewis-book-kyle-bass-has-big-role-as-a-europe-superbear-2011-10
Shouldn’t the title of this post be “cds rates, SYMPTOM, of global credit crisis”?
PnD, yes and no. A lot of that shit gets stuffed in the repo market, when it unwinds it has to clear in 1 day. But yeah, the bonds tank, the yield goes parabolic and the CDS rates blow out.
AWD, what’s a bank? I haven’t been to one in years, I thought we were now on a gold and silver standard.
I don’t know, in all honesty. I’m sure the loons will print, but they may fight about it while Greece burns to the ground. Either way, I’d only take chances with the smokesters money.
With an answer like that, you missed your calling. You should be a politician. Just kiddin,
I don’t know either. I was just wondering if you see a credit market seizure anytime soon.
Hi AWD:
I truly don’t know. I’m convinced it could go either way. I was just reading James Turk’s piece on King World News.
The largest bailout figure I’ve seen is 3 trillion Euros, which is substantially greater than our stated 700 billion dollar Paulson special which wound up being about 14 trillion. The banks over there seem a lot worse, and like you said their tied at the hip with MM Funds to our banks.
Either way, going to be quite the show to see.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/10/3_James_Turk_-_This_Collapse_is_Bigger_than_Governments_or_CBs.html
“The only uncertain thing is which side of the Atlantic a major bank will collapse? Because there are so many insolvent and fragile institutions around, it is hard to say which domino will topple first. I don’t think investors fully understand at this point the potential ramifications….
“When the first domino toppled in 2008, central banks stopped the contagion at Lehman, but they didn’t solve the problem, which has now become larger and much more severe than it was three years ago. What this means is that once the first domino topples, this event may be beyond the control of any one government or even central banks. This is a structural problem, meaning the system is broken and fundamental changes are required.”
Davos:
Thanks for that. Looks like a race to the bottom.
I wonder if they’re taking odds in Vegas (or Smokey’s basement) on which bank will go belly up first.
That dipshit Cramer was on tonight saying “we’re not Europe, this isn’t 2008” He’s correct on both counts, but his meaning is inverted. That isn’t a good thing, it’s a bad thing. Much worse than 2008.
Dave Doe,
Thanks much. That was most considerate of you, knowing Bass is one of my faves.
A terrific link.
Bass getting a return of $700,000 per $1100 he put up is strong.
Bass getting 650-1 return on Greek debt CDS tells me he is well ahead of the curve.
I have tried hard to educate the Administrator regarding Kyle Bass, but it falls on deaf ears. I tell him nearly a year ago, “Damn, Kyle Bass knows his shit, you’d better listen to him.”
The Administrator responds, “Ron Paul for president. China’s crashing.”
Then I tell him, “Bass says Europe and Japan will fall before the US, and the US has three or four years left.”
The Administrator replies, “Ghost cities. Ron Paul for president.”
Now the Administrator will be in a trap. On the one hand, he fucking LOVES author Michael Lewis. And he DAMN well will read anything that Michael Lewis writes. On the other hand, since Smokey likes Bass, he’ll be damned if he’ll listen to anything Bass says.
BTW, Dave Doe—-Bass has similarly structured bets, only much larger, on Japan.
The only thing Bass better be worried about is the counter parties that hold his contracts.
“Thanks for that. Looks like a race to the bottom.
I wonder if they’re taking odds in Vegas (or Smokey’s basement) on which bank will go belly up first.
That dipshit Cramer was on tonight saying “we’re not Europe, this isn’t 2008″ He’s correct on both counts, but his meaning is inverted. That isn’t a good thing, it’s a bad thing. Much worse than 2008.”
+1 !!!
There will be both smoke and fire when the Euro credit markets seize up. With the efficiency and courage European governments project (//sarc off//) there will be acres of damages during the smoke phase.
I would say that the markets are in the process of discounting something really big as we speak and smoke is pouring out of every orifice.
When the fire comes along, we’ll see – it’s way past the point of try to predict anything.
@Davos: You keep selling yourself short, sir. Intellect does not base itself in a school. It bases itself in the brain of a man who does the work to educate himself about things he knows not. That’s a whole lot more important than some piece of paper that says “I showed up”. You wrote the most popular article ever published on FSO. If that’s not an ego builder, I don’t know what is.
We know that you know what you’re talking about. So stop the self-depreciation bit and keep on keeping on! And thanks!
MA