{"id":9767,"date":"2015-07-07T06:50:42","date_gmt":"2015-07-07T11:50:42","guid":{"rendered":"http:\/\/olduvai.ca\/?p=9767"},"modified":"2015-07-07T06:53:31","modified_gmt":"2015-07-07T11:53:31","slug":"greece-fallout-italy-and-spain-have-funded-a-massive-backdoor-bailout-of-french-banks","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=9767","title":{"rendered":"Greece Fallout: Italy and Spain Have Funded a Massive Backdoor Bailout of French Banks"},"content":{"rendered":"

Greece Fallout: Italy and Spain Have Funded a Massive Backdoor Bailout of French Banks<\/a><\/h3>\n
\n

\"Greece<\/p>\n<\/div>\n

In March 2010, two months before the announcement of the first Greek\u00a0bailout<\/a>, European banks had \u20ac134 billion worth ofclaims<\/a>\u00a0on Greece. \u00a0French banks, as shown in the right-hand figure above, had by far the largest exposure: \u20ac52 billion \u2013 this was 1.6 times that of Germany, eleven times that of Italy, and sixty-two times that of Spain.<\/div>\n

The \u20ac110 billion of loans provided to Greece by the IMF and Eurozone in May 2010 enabled Greece to avoid default on its obligations to these banks.\u00a0 In the absence of such loans, France would have been forced into a massive bailout of its\u00a0banking<\/a>\u00a0system.\u00a0 Instead, French banks were able virtually to eliminate their exposure to Greece by selling bonds, allowing bonds to mature, and taking partial write-offs in 2012.\u00a0 The bailout effectively mutualized much of their exposure within the Eurozone.<\/p>\n

The impact of this backdoor bailout of French banks is being felt now, with Greece on the precipice of an historic default.\u00a0 Whereas in March 2010 about 40% of total European lending to Greece was via French banks, today only 0.6% is.\u00a0 Governments have filled the breach, but not in proportion to their banks\u2019 exposure in 2010.\u00a0 Rather, it is in proportion to their paid-up capital at the ECB \u2013 which in France\u2019s case is only 20%.<\/p>\n

In consequence, France has actually managed to reduce its total Greek exposure \u2013 sovereign and bank \u2013 by \u20ac8 billion, as seen in the main figure above.\u00a0 In contrast, Italy, which had virtually no exposure to Greece in 2010 now has a massive one: \u20ac39 billion.\u00a0 Total German exposure is up by a similar amount \u2013 \u20ac35 billion.\u00a0 Spain has also seen its exposure rocket from nearly nothing in 2009 to \u20ac25 billion today.<\/p>\n

In short, France has managed to use the Greek bailout to offload \u20ac8 billion in junk debt onto its neighbors and burden them with tens of billions more in debt they could have avoided had Greece simply been allowed to default in 2010.\u00a0 The upshot is that Italy and Spain are much closer to financial crisis today than they should be.<\/p>\n

…click on the above link to read the rest of the article…<\/div>\n","protected":false},"excerpt":{"rendered":"

Greece Fallout: Italy and Spain Have Funded a Massive Backdoor Bailout of French Banks In March 2010, two months before the announcement of the first Greek\u00a0bailout, European banks had \u20ac134 billion worth ofclaims\u00a0on Greece. \u00a0French banks, as shown in the right-hand figure above, had by far the largest exposure: \u20ac52 billion \u2013 this was 1.6 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,7035,195,200,2467,279,281,7036,333,1167,418,1464,741,743],"class_list":["post-9767","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-currencies","tag-debt","tag-default","tag-emu","tag-eu","tag-europe","tag-financial-crisis-and-recession","tag-france","tag-greece","tag-imf","tag-italy","tag-sovereign-debt","tag-spain"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9767","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9767"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9767\/revisions"}],"predecessor-version":[{"id":9769,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9767\/revisions\/9769"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9767"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9767"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9767"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}