Wednesday, May 5, 2010
Are France and Germany In Trouble?
You know that Greece, Portugal and Spain are in trouble.
You probably know that the UK is threatened by the sovereign debt contagion.
But as the following Reuters chart shows (based on information provided by BIS), France and Germany are the largest holder of Greek debt:
As The Street notes, France and Germany are also greatly exposed to Portugal and Spain:
And as Tyler Durden points out, France Germany and the UK are getting hit with wider credit default swap spreads:France's banking sector has the second-largest exposure to Portugal and Spain debt loads, after Germany, according to the BIS.
European banks have more at-risk assets in Portugal and Spain than in Greece. European lenders are holding Portugal debt issues of $240.5 billion -- including $47.4 billion by German banks and $44.9 billion by French firms, according to BIS figures from the end of 2009 quoted in a Bloomberg report.
With a stunning $630 million, $558 million and $370 million in net notional derisking, France, UK and Germany are the top three most active recipients in negative bets in the prior week, not just in sovereigns but in all names...Given that central bankers have - for several years - focused on credit default swaps as the most important economic indicator (see this and this), widening spreads are a bad sign, indeed.
Zero Hedge's outside bet to be the first core country to blow up, thanks to its massive PIIGS exposure, France, finally made the top spot in net derisking, with $629 million in net notional, or 189 contracts. The smart money is now massively betting that Europe's core is done for; as the PIIGS have demonstrated, the blow out in spreads for the core trifecta can not be far behind.
4 comments:
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Posts
Germany certainly has no problems to fund it's deficit. Same for France.
ReplyDeletelook at the low interest rates, and you'll see that this is pointless. The most bankrupt country in the world ist the USA. If the FED and the Chinese didn't buy the bonds the United States would be in deep trouble.
I have read that european banks are protected by CDS and CDO:s issued by four big american banks.
ReplyDeleteI think that everyone is having a blow out what do you think? European worlds are blowing up debt wise and the US is having an oil blow out. Hmmn maybe we should be looking at what we are doing people!
ReplyDeleteThe fact that the Germans and the French who have been sending migrants to Britain have a far worse economic crisis than Great Britain is sufficient reason for us to withdraw from the doomed 'Euro-bubble'.
ReplyDeleteThe peoples of the Slav states have more in common with Russia than with the culture of Indo-European Western Europe. It would be best for them to reach an accommodation with their Slavic cousins in Russia.