That Belgian bank

Over on ZeroHedge somebody is seriously flabbergasted about the financial sink-hole Dexia and Belgium have got themselves into.

For starters, Dexia had 566 billion euros in debt and 19 billion euros in equity as of the end of 2010. Right off the bat, that’s a leverage ratio of 29 to 1. Lehman Brothers was leveraged at 30 to 1 when it collapsed.

Now consider that Belgium’s entire GDP is just 348 billion euros. Dexia has 566 billion euros in assets. Of this 352 billion are loans. Put another way, Dexia’s loan portfolio alone is larger than its home country’s entire economy.

AND THIS BANK PASSED THE STRESS TESTS.

Suffice to say, Europe’s banking system is in far FAR worse shape than anyone over there is admitting. The stress tests were complete and total fiction. And the market is starting to figure this out.

The markets are figuring this out only now? Have they not been paying attention? When things get serious YOU HAVE TO LIE. That is what one of the foremost EUnion top banana said himself. That is the EUnion way.

Makes you wonder, though, what else is hiding in the closet of the room where the stress test was taken, doesn’t it?

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