The Dexia Domino & Belgium’s Caretaker Government

dexia building

Photo: Wikimedia

The fear that Dexia, a Brussels-based money centre bank, may become ‘another Lehman’ following default by one or more European sovereigns was given further credence a few days ago when its CEO resigned suddenly. The surprise departure of the senior executive — often a grave omen — turned up the heat up on a stew which had already been  simmering for months.

While both the French and German governments have borrowing capacity to backstop their banking systems, the Belgians recently broke Iraq’s record for being the country unable to form a government for the longest period of time (500+ days and counting).

While dysfunctional government appears to have been a boon for the economy, it raises interesting questions about what will happen should Dexia need a bailout following what appears to be an imminent Greek default.

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