Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group’s implosion nearly three years ago.
Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender’s bonds against default is now £343,540.
The cost of insuring RBS bonds is now higher than before the taxpayer was forced to step in and rescue the bank in October 2008, and shows the recent dramatic downturn in sentiment among credit investors towards banks.“The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008,” said one senior London-based bank executive.
“I think we are heading for a market shock in September or October that will match anything we have ever seen before,” said a senior credit banker at a major European bank.
It’s not a liquidity problem, but whatever.
The poor peoples hero Warren Buffet made a kool $700 million dollars five minutes after the Wall Steet market opened today. His $5 billion dollar investment in Bank of America stock overnight inreased his personal wealth dramatically. Capitalist Buffet is a pig who feeds in the trough of greed while fraudulently portraying himself to be sympathetic to the plight of the proletariat (labor or wage earner). This man may be one of the worst people on the planet.