It’s Day 207 in the Big Belgium waffle house:
RTRS-BELGIAN GOVERNMENT MEDIATOR STEPS DOWN AFTER PROPOSAL FOR COALITION TALKS FAILS-PALACE
17:01 06Jan11 RTRS-BELGIAN GOVERNMENT MEDIATOR STEPS DOWN AFTER PROPOSAL FOR COALITION TALKS FAILS-PALACE
RTRS-BELGIAN INTER-PARTY MEDIATOR STEPS DOWN AS BELGIUM REMAINS WITHOUT GOVERNMENT FOR 207 DAYS -PALACE
The background here is that Flemish Social Democrat Johan Vande Lanotte, who had been appointed to find common ground between Belgium’s seven parties from Dutch-speaking Flanders and French-speaking Wallonia, has been unable to resolve the country’s now 200-day plus political deadlock.
Belgium consequently continues to be governed by a temporary cabinet, which holds limited public authority over what to do about the country’s increasingly precariously positioned public debt.
Credit default swaps on Belgium responded by hitting record wides on Thursday, especially as it became obvious that the mediation attempts would fail. According to data provider Markit, the five-year Belgian swaps widened by 17 basis points on the day, to finish 240 basis points wide.
Although here’s a historical data chart from Bloomberg for context:
And if that wasn’t enough, the market was further wobbled on news that KBC Groep, Belgium’s biggest bank and insurer by market value, would be forced to take additional charges of $433m in the fourth quarter relating to its Irish loan book exposure.
That’s almost too much for anyone’s little grey cells.
Related links:
Does RBS need to take an Irish hit? – FT Alphaville
‘It’s the beginning of the endgame for…’ Belgium? – FT Alphaville
The corroding core - FT Alphaville