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View Diary: The Euro Crisis by the numbers (165 comments)

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  •  I posted this in a diary last night (28+ / 0-)

    but think it bears repeating since it's on topic.

    The CEO of Dexia, a VERY troubled bank has actually called out the credit default market for what it is, piracy.

    Coming from the CEO of a bank that's currently begging for bail outs, hat in hand, it struck me as a fox seeking aid from the hen house while decrying the nature of the other foxes.

    Dexia CEO takes aim at "pirates" hijacking euro debt

    BRUSSELS, Nov 25 (Reuters) - The Chief Executive of troubled Franco-Belgian bank Dexia on Friday accused speculators of using underhand methods to try to force a default in sovereign bonds, a practice he compared to 17th-century piracy.

    Pierre Mariani has been forced to seek government help for Dexia, after it was hit by the dwindling value of its holdings of European government bonds. At a seminar in Brussels, he spoke out against speculators who, he said, buy insurance against bond defaults, and then try to cause a default.

    "We are pretty much in that situation, where there are bad people who buy these insurances, and behind they go and finance pirates who will allow them to make a lot of money on it," Mariani said.

    "We are in a mechanism which is what the king of England banned in the 17th century," he said. "That's to say the naked insuring of shipping cargoes ... because there were bad people who subscribed to the insurance even though they had no stake in the ships in question and who paid pirates to sink them."

    Analysts said the criticism of default insurance wasn't totally unreasonable, but that it showed that Mariani was feeling the strain of the attention that has been focused on him recently.

    Belgium has a bond sale coming up tomorrow. They've just been downgraded by S&P because of their political problems establishing a government, their debt load (which they just addressed in a budget passed yesterday) and the Dexia bailout the government agreed to (they are responsible for 60% of 90 billion Euro in guarantees Dexia needed over the next 10 years). Their bond yields have already been driven up from 3.82% two months ago to 5.86% on Friday. If bond traders push them to the breaking point tomorrow, we'll see the next country to go down in this crashing deck of cards.

    48forEastAfrica - Donate to Oxfam "Compassion is the radicalism of our time." ~ Tenzin Gyatso, 14th Dalai Lama -7.88, -6.21

    by Siri on Sun Nov 27, 2011 at 07:47:36 AM PST

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