Thomas Jefferson
Posted on 11/06/2011 2:32:00 PM PST by DeaconBenjamin
Banks including BNP Paribas and ING ditch billions of euros of eurozone government bonds.
More lenders are expected to retreat as the euro zone crisis deepens and leaders raise the possibility of the exit of Greece from the bloc, further damaging prices.
"The market value of the debt of the countries most under scrutiny is likely to decline further as banks unload sovereign bonds," Charles Dallara, managing director of the Institute of International Finance, warned.
BNP, the biggest overseas private holder of Greek government debt, took a 2.6 billion euro writedown on Thursday as the crisis in the currency bloc deepened, mostly because it wrote down the value of its Greek bonds to 40 percent of par value.
The bank had been told by the French government not to sell down its Greek bonds as the country's troubles grew over the summer, to prevent destabilising the euro zone, a senior banking source has told Reuters, on condition of anonymity.
BNP lost 362 million euros in the third quarter and said it will lose another 450 million euros in October from selling almost 25 billion euros of sovereign debt, or a quarter of its holdings, reducing its Italian bonds by 8.2 billion euros to 12.6 billion euros over the four months.
The retreat is not restricted to those economies seen as most vulnerable to the crisis.
In addition to cutting back on 2.2 billion euros of Spanish sovereign bonds (leaving 0.5 billion euros), BNP also reduced its French debt holding by 1 billion euros (leaving 13.8 billion euros) and its German debt by 1.4 billion euros (leaving 2.5 billion euros).
In a similar move, Dutch financial group ING cut its Greek, Italian, Irish, Portuguese and Spanish sovereign bond holdings by 5.4 billion euros in the last four months.
(Excerpt) Read more at in.reuters.com ...
After the “haircut” (THEFT), why would anyone buy these bonds?
This is because the board that decides that a 50% haircut on Greece bonds is not a default, and therefore did not trigger the CDS that these banks bought to protect themselves from just such an occurence are worthless,...wouldn’t you get rid of loser CDS’s if you were so silly to buy these frauds from the US financial industry?
The banks on both side of the Atlantic were stuffed with Greece Bonds and bought CDS as INSURANCE, that is now NOT insurance.
TBTF’s are collapsing more of the system, and no OWS idiot had anything to do with it. They are bring this on all of us.
Right, nobody would buy these bonds, and I bet they are pretty steamed at the US Banks for being played for fools.
Because you can buy credit default swaps which will pay out like insurance in case there is a credit event. So there’s no risk.
either the euros are going to blow themselves up financially
or the moslems are going to blow them up.
Except that it's been decreed that a 50% loss is not a credit event.
It's like you buy insurance to protect you against loss if you total your car. Then somebody runs a stop-sign at 40 mph, nearly rips your car in half, and the policeman who comes out to write-up the accident report says "I don't see any damage; there's no need to file a report".
Then, your insurance company says "Without a police accident report, we don't pay".
“Right, nobody would buy these bonds, and I bet they are pretty steamed at the US Banks for being played for fools.”
OTOH, 65% interest or so on those bonds looks pretty good/s;)
Yup. screw it then, Europe, you’re on your own this time around.
as some unloaded others loaded up
Wonder who
Somebody who is sitting on a fence
Trying to make a dollar out of fifty cents.
Not when they don’t have the money to pay that interest.
And the “insurance” has refused to pay for the loss on the 50%.
Someone who thinks the actual loss will be 45%, not 50%.
Because a government somewhere has ordered you to do so? (Can you say fascism?)
Except they are not on their own ...
The Euro and Your 401(k)
http://online.barrons.com/article/SB50001424052748704760604577011852238080484.html
this article also an FR topic
Hard to tell yet what’s really going on. In the meantime, Euroland banks look to be preparing for a Euro breakup if the ‘begging committee’ comes back empty from China. I guess taxes aren’t high enough yet in Euroland until government takes all your money and the banks take all your property.
Instead of issuing individual bonds (like for Greek and probably next, Italy), one Euro bond should be issued to cover all the overspending by its member countries. Even that looks a little iffy now as time marches on with debt on its back.
Again, Euroland making the US look good.
Once the various banks saw this happen there is virtually no way that any other bank is going to remain invested in European bonds of any kind.
The Euro is going to take it the throat very shortly. I just hope that our rulers don't decide that we have to step in front of that speeding train to attempt to save fellow socialists.
bfl
I think our “leaders” will do whatever they are asked by the Eurtopians.
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