Wednesday, December 15, 2010 5:27 AM

PIGS Exposure Table, Explaining the Panic by Numbers; Credit Warning in Spain, Belguim; Piecemeal Proposals Doomed

To explain the ECB's panic over Spain, all one needs to do is look at this "exposure table" from the recently published BIS Quarterly Review. http://www.bis.org/publ/qtrpdf/r_qt1012.pdf

I highlighted areas of interest.



Exposure to Spain
Germany - $216.6 billion
France - $201.3 billion
Great Britain - $136.5 billion
US - $172.8 billion

Exposure to Ireland
Germany - $186.4 billion
France - $77.3 billion
Great Britain - $187.5 billion
US - $108.3 billion
Spain - $17.7 billion

Exposure to Portugal
Germany - $44.3 billion
France - $48.5 billion
US - $35.6 billion
Spain - $98.3 billion

Exposure to Greece
Germany - $65.4 billion
France - $83.1 billion
US - $36.2 billion

Note that Spain which itself needs to be bailed out, has a $98.3 billion exposure to Portugal (which will probably need to be bailed out next), as well as a $17.7 billion exposure to Ireland (bailout underway).

Spain and Ireland are the big boys here, but the whole thing is a mess. The table does explain the panic at the ECB and EU to contain this mess. However, it is simply too late. The only question is how long will it take before this blows sky high?

S&P Warns on Belgium

Within months (if not much sooner) we may need to add Belgium to to the table. Please note the S&P gives Belgium credit rating warning amid political uncertainty http://www.guardian.co.uk/business/2010 ... -and-poors

S&P lowered Belgium's outlook to "negative" from "stable", because ongoing political instability is hampering efforts to bring the country's deficit under control. Unless the situation is resolved, S&P is likely to cut its rating on Belgium's long-term debt by one notch by June 2011.

Belgium has been without a government since April when its ruling coalition collapsed. A general election was held two months later, but Belgium's political parties are still trying to form a government. The country has struggled over the past few months to reach agreements on fiscal policy, social security, health care and labour market regulation.

Belgium is currently running a total debt-to-GDP level of about 100%, and its annual deficit is likely to hit around 4.8% of GDP this year. The financial markets have been fretting about Belgium's ability to cut its deficit for several weeks. In late November the cost of insuring its debt against default hit a record high.

Spain on Review by Moody's

While singing a song and dance about the strength of Spain that nobody in their right mind believes, simultaneously Moody’s puts Spain’s Debt Rating on Review. http://noir.bloomberg.com/apps/news?pid ... Fgd0cc6K88

Moody’s Investors Service put Spain’s Aa1 debt rating on review for a possible downgrade on concern over the country’s funding needs, debt level and control over public finances.

“Moody’s believes that the above-mentioned downside risks warrant putting Spain’s rating under review for downgrade,â€