As the Eurozone crisis worsens, and continues to play havoc with the global economy, Eurozone finance ministers have indulged in a large serving of fudge.
They have cancelled a meeting, scheduled for 13 October, when they were expected to sign off on the next tranche of Greek bailout money.
As reported yesterday, Greece has announced that it will miss its deficit reduction plan for 2011.
The Greek Finance Minister, Evangelos Venizelos, has said that a "delay" (note that the EU has "cancelled" the meeting, not "delayed" it) will not cause Greece any problems as Greece has funds until November.
This is rather an "odd" admission, as Greece had previously said that it needed the money by mid October in order to avoid defaulting on its loans.
Does anyone believe anything the Greeks say anymore?
Anyhoo, the media are of the view that the "cancellation" or "delay" (depending on how optimistic you are) of the meeting is to enable the Eurozone to come up with a fudge; whereby the Eurozone's mandated budget targets for Greece for 2011 would be combined with the targets for 2012. Thereby fudging Greece's failure, and kicking the much kicked can further down the road to financial oblivion.
All very well if you are a Eurozone finance minister. However, the longer this farce continues the longer the global economy suffers.
In other news, Dexia SA (which is on the verge of collapse), BNP Paribas SA and Societe Generale SA are in a state of denial and are resisting pressure from regulators to accept more losses on their holdings of Greek government debt amid criticism that they haven't written down the bonds sufficiently.
The French and Belgium governments have pledged to prop Dexia up. However, they have overlooked one "small" detail"; namely the size of Dexia's exposure when compared to the host country's GDP.
Want to scare yourselves?
- Belgium - Dexia: 180% of GDP
Remember folks, Dexia passed its "stress test"!
Here are some other well known banks:
- France - BNP Paribas, Credit Agricole, SocGen: 237% of GDP
- Germany - Deutsche Bank: 84%
- Italy - Unicredit, Intesa Sanpaolo: 101%
- Netherlands - Fortis: 155%
- Spain - Banco Santander: 92%
- UK - RBS, Barclays, HSBC: 337%
To put it bluntly the Eurozone hasn't a hope in hell of saving these banks, if they fall over. Dexia most certainly is going to collapse, and next up is rumoured to be Deutsche.
In other news, the rumour that Germany is printing Deutsche Marks in order that it may leave the Eurozone is doing the rounds again.
I for one would very much welcome that, as it would allow the remaining members of the Eurozone to devalue the currency and breath life into their dying/dead economies.