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And so it begins. The first major European bank bailout of 2011 has now happened. French/Belgian banking giant Dexia has failed and both governments have pledged to participate in a rescue plan. But Dexia will not be the last major European bank to fail. Even now, governments all over Europe are feverishly developing plans to bail out major national banks in the event that the current financial crisis goes from bad to worse.
As predicted, the Dexia "bad bank" rumor lasted all of, oh, 24 hours. After exhausting all talking points, French and Belgian politicians took out the abacus and were horrified to learn, as we suggested, that any implicit backstop would cost them dearly, and in France's case, at least one A of those critical AAAs that continue to keep Europe afloat. So implicit moves to explicit and as Belgian De Tijd reports, "the Belgian government will nationalize Dexia Bank Belgium."
After the stock tumbled 20% on the day, and 45% in the past week, the life support plug appears to have been mercifully pulled. Next up: Dexia's website experiences a "bank of america" moment?
A rather cryptic message from Sarkozy advisor Henri Guaino who, quoted by Bloomberg while speaking at an interview in Yerevan, Armenia said that the French government "isn't planning to take stakes in banks" and adding that "this isn't envisaged at the moment." At the moment no, but after the moment? He concluded with the ominous: "maybe a recapitalization will be necessary." So who will be the next Dexia? An inquiring market wants to know. And did the market, in its latest manifestation of Korsakoff syndrome, already forget that yesterday it was announced that 'France Has Prepared An Emergency "Just In Case" Nationalization Plan For "2 Or 3" Banks." But when the next bank implodes, a multi-trillion French one to be sure, everyone will be stunned, stunned, as usual.
German Chancellor Angela Merkel is hosting the heads of the International Monetary Fund and World Bank today, while European bank stocks gained for a second day as officials discussed a coordinated capital injection.
Merkel is due to hold talks from 3 p.m. in Berlin with IMF chief Christine Lagarde, World Bank president Robert Zoellick and Angel Gurria of the Organization for Economic Cooperation and Development among others (Finance Ministers from France,Mexico and Brasil - added by Shenon) European Central Bank President Jean-Claude Trichet is due to meet Merkel after chairing his last rate-setting meeting.
The European Commission is “proposing to have a coordinated action to recapitalize banks,” commission President Jose Barroso said today in a video question-and-answer session.
Nonfarm payrolls were flat in August and only 17,000 jobs were added in the private sector, the weakest report of the year.
A Verizon Communication Inc strike helped to make the August report look especially soft. These workers, roughly 45,000, returned to their positions in late August and will be counted as an addition to the September payroll count.
In our previous post we warned, indirectly through the IMF, that the biggest risk for Europe is the inability to reach consensus over anything from the most complicated, to the simplest matter. As noted previously, one of the main initial drivers of the market surge which has since translated into yet another short covering rally of epic proportions was the belief that Europe can actually come together in agreement over the simplest thing - like its own survival. Alas, it appears even that is not the case. As Bloomberg reports, "Germany and France are at odds over whether the European Financial Stability Facility should have limits on government bond purchases, Handelsblatt reported, citing an unidentified high-ranking European Union diplomat. France doesn’t want to restrict the EFSF on how much of its funds it can use for such purchases, the newspaper said in a preview of an article to appear in tomorrow’s edition. Germany wants to limit the amount EFSF can spend for bonds per country and is also considering whether there should be a time limit for bond purchases, Handelsblatt said." Said otherwise, here comes the latest cause of discord within Europe. Unfortunately, it also means that any rumor, innuendo and speculation that Europe has finally reached a coherent union over its own bailout can be promptly discarded. As if there was ever any doubt in the first place.
Originally posted by marg6043
reply to post by Shenon
This is funny, Isn't Germany and Frances the ones that pushed for that union?, now they don't want to keep losing money?
I guess the dream of power over the EU is looking costly and none benefits.
I never truly understood why wanting an unified EU, greed can cloud the mind every time.
edit on 7-10-2011 by marg6043 because: (no reason given)
The Deutsche Mark played an important role in the reunification of Germany. It was introduced as the official currency of East Germany in July 1990, replacing the East German Mark (Mark der DDR), in preparation for unification on 3 October 1990. East German marks were exchanged for German marks at a rate of 1:1 for the first 4000 Marks and 2:1 for larger amounts. Before reunification, each citizen of East Germany coming to West Germany was given Begrüßungsgeld, greeting money, a per capita allowance of DM 100 in cash. The government of Germany, and the Bundesbank were in major disagreement over the exchange rate between the East German Mark and the German mark.
France and the United Kingdom were opposed to German reunification, and attempted to influence the Soviet Union to stop it. However, in late 1989 France extracted German commitment to the Monetary Union in return for support for German reunification.
"The increase in employment partially reflected the return to payrolls of about 45,000 telecommunications workers who had been on strike in August.
Lord Chancellor and public disgrace
Bacon's public career ended in disgrace in 1621. After he fell into debt, a Parliamentary Committee on the administration of the law charged him with twenty-three separate counts of corruption. To the lords, who sent a committee to enquire whether a confession was really his, he replied, "My lords, it is my act, my hand, and my heart; I beseech your lordships to be merciful to a broken reed." He was sentenced to a fine of £40,000 that was remitted by King James and committed to the Tower of London during the king's pleasure; his imprisonment lasted only a few days
Idols of the Mind
Bacon also listed what he called the Idols (false images) of the mind - some are similar to what is now called cognitive bias. He described these as things which obstructed the path of correct scientific reasoning.
Idols of the Tribe (Idola tribus): This is humans' tendency to perceive more order and regularity in systems than truly exists, and is due to people following their preconceived ideas about things.
Idols of the Cave (Idola specus): This is due to individuals' personal weaknesses in reasoning due to particular personalities, likes and dislikes.
Idols of the Marketplace (Idola fori): This is due to confusions in the use of language and taking some words in science to have a different meaning than their common usage.
Idols of the Theatre (Idola theatri): This is the following of academic dogma and not asking questions about the world.
These four fallacies are sometimes compared to a similar list in the first part of Roger Bacon's Opus Majus which, although it was much older, had not been printed in Bacon's time.
Though the well-connected antiquary John Aubrey noted among his private memoranda concerning Bacon, "He was a Pederast. His Ganimeds and Favourites tooke Bribes", biographers continue to debate about Bacon's sexual inclinations and the precise nature of his personal relationships. Several authors believe that despite his marriage Bacon was primarily attracted to the same sex.