Wednesday, November 23, 2011

Dexia will bring down the Euro

Toxia © fintag

News comments:
I have a lot of money riding on the end of the Euro.

Watching the French and the Belgians baulk at the toxic asset that is Dexia will, despite political spin assurances, be the catalyst for the end of the Euro. Although a few countries have got themselves into a debt mess, it is possible for the Euro to continue whilst Greece et al hang on for dear life before being frozen out. It is only when France tumbles will the Euro dream come to an end. France lives off EU subsidies and with an election coming up next year, Sarkozy needs to keep the AAA and the Euro to give him any chance of another term.

Along comes Dexia. It has the same number of staff as Thomas Cook but that is where the comparison ends. Dexia is like a lily floating on top of a cess pool. This bad bank of toxic mess is being absorbed by the French and Belgians (having sold off at bargain basement prices the best bits). This opaque pool of cess includes lots of sovereign debt and other worthless bonds to the tune of EUR90bn. That is a lot for the French tax payer to underwrite given Belgium is a bust country and cannot do so.

Watching the 10 yr OATS BTAN move up to the resistance levels we say earlier this year is the only thing to watch these days.


Today's shorts:
Dexia is toast (ftalphaville)

Germany's little problem: nobody wants its debt (reuters)

Why I want to emigrate to ...Norway (marketwatch)

Today's longs:
Dexia is fine (businessweek)

Simon Cowell to host a new programme called the F Factor where countries compete to secure a funding line.