Belgian Bailout T.B.A. ???

In May 2010, Greece got a 146 billion Euro bailout.

In July 2010, everyone remembers the overly-positive European Stress Test results.  Only 7 banks failed with a combined shortfall of 3.5 billion Euro.  Since then, the Euro strengthened and the Dollar weakened thanks to POMO.  The risk "on" trade continued as commodities and US stocks rose.  That is, until recently.

In November 2010, Ireland will get an 85 billion Euro bailout package:  67.5 billion euros from the European Union and International Monetary Fund and 17.5 billion euros from its own pension reserves.


I have maintained that Belgium is the Eurozone's black swan since everyone has focused on the PIIGS (Portugal, Ireland, Italy, Greece, Spain).  That's not to say that Italy and Spain are in the clear.  People have started talking about Belgium.  We all remember the botched bank bailout which caused the Belgian Govt to collapse.  And don't forget, Belgium has a 100% debt to GDP ratio, no Govt and a much bigger GDP than Ireland or Portugal.


Meanwhile, the iShares Belgium ETF ($EWK) has managed to stay above its post-Euro-stress levels of roughly $12.  The terrible performances (since the Euro-stress-test) of Bank of Ireland ($IRE), Allied Irish Bank ($AIB) and National Bank of Greece ($NBG) could give some indication of $EWK should there be a Belgian bailout.  Although, only 14% of $EWK is invested in the financial sector.  iShares Spain ETF ($EWP) is 46%. iShares Italy ETF ($EWI) is 36%.  The E.U. seems on shaky ground as there is a daily protest and/or riot in some European country.