Yesterday, during the first trading day since the last stress test, the markets wanted to pummel the European banks. The reaction to the indices indiates that the stress tests have not been able to ease investors? anxiety about the EU.
Greek started a colossal sovereign debt problem, and the banking system is ending it. Germany and France, above all. For them, it is considered a grand success that Bankia has placed everything they wanted to.
Although its IPO was discounted by 60% of book value, when it actually went to market it captured an impressive 3.4 billion. And because one step isn?t a mile, financial tests are not nearly enough to calm down a market that has been putting along for months like some run-down jalopy. A year ago, the stress tests were seen as an exercise in transparency and diagnostics.
Today, three bailouts later and with the Greek ship sinking more quickly than others are creating a stimulus package for it, the most recent stress tests are passing by us unnoticed. We are waiting for Thursday, when European leaders should give us some clarity around the situation. It seems like not enough time remains.
Greece is in critical need of a plan to avoid even a whiff of defaulting. Some figure that part of the Stability Fund?s resources could go to purchasing Greek bonds and include a tariff on the bank financing the second bailout.
The ratings agencies could be a stumbling block, especially those with whom the EU has made agreements. Brussels already admitted that it is best not to upset them. It seems that Germany is positioning towards a de Greek default. Thursday?s meeting should provide some concrete results.
Translated and Edited in English by Brandon Dyches and Jose L. De Haro
