The market is rife with rumors about the previous agreement to bail out the bank and insurance firm DEXIA is coming apart as the Belgians are balking at the cost. Something that needs to be considered is that the French are probably putting pressure on the deal to force the Germans to agree an EBC-sponsored bailout so as to get a major infusion of capital. Dexia is already a problem for Europe so by getting the Belgians to pull the plug on the deal the French can force the Germans to immediately step up and agree to a large role for the ECB.
If French banks become insolvent, the Germans will be right behind. What better way to initiate German cooperation–and this can be done–by using a bank that is already the subject of a bailout. This would fit with today’s rumor about the IMF enhancing its SDR pool by utilizing its pool of funds to aid the European financial system. In tonight’s Financial Times there is also a story about the possibility of European central banks utilizing their GOLD HOLDINGS TO SECURE A EUROPEAN BOND.
There is definitely a major plan in the works for some CONCERTED ACTION USING ALL THE ELEMENTS AVAILABLE: GOLD, ECB, EFSF, IMF FUNDS and whatever else can be found. Something is definitely in the works. More tomorrow as rumors begin to surface.