Tuesday, May 4, 2010

France could be in big trouble!



French banks have the greatest exposure to Greece with about $80 billion--or a little less than half the total exposure--of all European banks' claims on Greece. Credit Agricole and Societe Generale are among individual European banks most exposed to Greece's financial crisis.

With no credible deposit insurance in France, or for that matter in Europe, bank runs are a distinct possibility. A total payments crisis is not out of the question for France and the rest of Europe.

4 comments:

TomatoBasil said...

Does the ECB have a discount window type facility for emergency Euro loans?

Mike Norman said...

Yes, but banks have to post collateral and they could very quickly run out if there are runs. That would seriously test the ECB's will to lend uncollateralized. No indication they're going to do that as of yet. Greece is still posting collateral, however, the ECB is giving them a "haircut" to let them get by.

Matt Franko said...

Mike,
AP reporting 3 dead in Greece from protest fire set at a bank.

Mike Norman said...

Policy makers now have blood on their hands. Germany is mostly to blame as they are opposed to fiscal supports because that might widen deficits even further. (Better than people dying.) Why is Germany always the souce of misery?