Dexia, a bank specialising in local government finance, formed of a heady mixture of a French nationalised bank and a Belgian one, has had to be rescued for the second time in three years. The problem, as I mentioned a month ago, is it invested in Greek Government debt. Dexia passed its European Banking stress test just a while back: the stress test didn't include European Sovereign Default, even though they all knew it was likely to happen. The authorities didn't want anyone to fail, you see.
The bailout is likely to push Belgian Government debt up to Italian levels.
Meanwhile France and Germany have had another summit. they announced afterwards that they had agreed on a solution to the Eurozone crisis, to the recession, to Greece and to Angela Merkel's ingrowing toenail but..... but they aren't going to tell us what it is for 3 weeks. This means, if I may translate for you, that they haven't agreed at all. France faces such a bill for bailing out its banks because of their loans to Greece that it wants the Financial Stability fund to do it (ie Germany to help pay) whilst the Germans think it should be for emergencies only, and that the French taxpayer should cough up.
Now, next Monday's European summit will be put back for a week while they think of something to say.
Eventually the markets will get fed up with this and start shorting the euro, and the French will say that everything would have been all right if it hadn't been for the evil Anglo-Sasson speculators.
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