Enormous fails to describe…
Feb. 11 Bloomberg — German and French banks’ “enormous” exposure to Portugal, Ireland, Greece and Spain explains why Europe’s biggest economies are moving to rescue their southern neighbors, Societe General SA said today in a report titled “Shotgun Greek Wedding.
Here come the nauseating parts. Hank Paulson, you have a trash can nearby?
The CHART OF THE DAY shows how much money German, French, Swiss and U.K. banks have at stake in the so-called PIGS countries. Banks in Germany and France alone have a combined exposure of $119 billion to Greece and $909 billion to the four countries, according to data from the Bank for International Settlements. Overall, European banks have $253 billion in Greece and $2.1 trillion in the so-called PIGS.
Here’s the graphic:
I’d say I hope it’s hedged, but if it’s not, it’s too late to get protection on the exposure. But make no mistake: this is a powder keg. If Greece defaults, counterparty risk will skyrocket, which is something I’ve been expecting. If a bailout is cobbled together, the Euro is trashed and the specter of sovereign downgrades awaits the strong Eurozone countries. Sure you’d end up kicking this powder keg down the road for a little while.
Until it lands right next to a WMD.
Hope nobody has a match…