Spain’s Record Yields Show Italy Bailout Risk, By Ben Sills - Jun 12, 2012 4:01 PM MT, Bloomberg News, http://www.bloomberg.com/news/2012-0...s-spreads.html

Spain’s benchmark borrowing costs climbed to a record yesterday, raising the specter of sovereign bailouts for the government in Madrid and then Italy that would stretch European Union finances to their limit.

The yield on Spanish 10-year government debt rose for a third day, touching 6.83 percent, the highest since 1997, after Fitch Ratings predicted that Prime Minister Mariano Rajoy will miss budget-deficit targets he’s made the foundation of his economic policy. Italian 10-year yields rose to the highest in almost six months.

The bond rout wiped out the effects of 1.1 trillion euros ($1.4 trillion) in official funding for euro-region banks that has held yields in check since December. Spain’s 10-year yield is close to the 7 percent level that forced Greece, Ireland and Portugal to seek bailouts. Italy, the second-biggest sovereign borrower in the euro area, may need to seek a rescue within months, said James Nixon, chief European economist at Societe Generale SA (GLE) in London.
Credit Agricole Seeks An End To Its Greek Imbroglio, By Fabio Benedetti-Valentini - Jun 12, 2012 5:00 PM MT, Bloomberg News, http://www.bloomberg.com/news/2012-0...imbroglio.html

In 2006, Georges Pauget, then Credit Agricole SA Chief Executive Officer, bought Greece’s Emporiki Bank, calling it a “perfect fit.” Six years on, the purchase has put the French lender in the eye of a perfect storm.

A possible euro exit for Greece has made Credit Agricole the foreign bank with the most to lose. France’s third-biggest bank has 23 billion euros ($29 billion) of Greek loans on its books, the largest such holdings for a foreign bank. Although Greek loans represent about 3 percent of parent Credit Agricole Group’s lending commitments, they amount to at least 40 percent of the country’s private cross-border debt claims.

Gains made in the polls by Greece’s anti-austerity parties before the June 17 election have raised the specter of the country having to abandon the euro, driving Credit Agricole to reassess support for its unit. Costs from Greece’s euro exit may reach 6 billion euros for the bank, Citigroup Inc. analysts Kinner Lakhani and Florent Nitu estimated.

“The Greek vote’s outcome will influence Credit Agricole’s decision on whether to stay or to quit the country,” said Jerome Forneris, a Marseille-based fund manager at Banque Martin Maurel, which manages $8.5 billion euros, including Credit Agricole shares. “If Greece exits the euro, what’s the interest of keeping a unit there?”
Finland Wants Collateral For Spanish Bank Aid From EFSF, By Kasper Viita - Jun 9, 2012 3:00 PM MT, Bloomberg News, http://www.bloomberg.com/news/2012-0...from-efsf.html

Finland will demand collateral for its share of emergency loans to shore up the Spanish banking system should the money come from the euro-region’s temporary bailout fund, Finance Minister Jutta Urpilainen said.

“It remains undecided whether the bailout will be granted via the temporary facility, in which case Finland will require collateral,” Urpilainen told reporters in Kokkola, Finland, yesterday. The other alternative is to grant the loan through the European Stability Mechanism, the “permanent crisis mechanism, which will provide better security for taxpayers” and won’t result in demands for extra guarantees, Urpilainen said.

Euro-area finance ministers agreed to bail out Spanish banks in a rescue worth as much as 100 billion euros ($125 billion) after the country’s access to market funding narrowed. The exact amount will be decided after an audit of the nation’s banks is complete later this month, Urpilainen said.

Finland demands collateral for payments from the European Financial Stability Facility, the temporary rescue fund, because it lacks a preferred creditor status. The ESM’s preferred status and the rules on private-sector burden sharing in case of default mean the permanent fund is less likely to incur losses, Finnish Finance Ministry aide Martti Salmi said yesterday.
Cram down, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Cram_down

Informal use

The term (sometimes used in the phrase cram-down deal) has also gained currency to denote informally any transaction where existing investors (debt or equity) are forced by circumstance to accept an unappealing transaction, such as an expensive financing, a debt transaction that subordinates them, a dilutive equity raising, or an acquisition at an unappealingly low price.[7][8]
List of countries by tax revenue as percentage of GDP, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/List_of...centage_of_GDP

Estonia, 32.3%
Finland, 43.6%
France, 44.6%
Germany, 40.6%
Iceland, 40.4%
Ireland, 30.8%
Italy, 42.6%
Greece, 33.5%
Spain, 37.3%
United Kingdom, 39.0%

Switzerland, 29.4%
Washington must agree on the rules of fiscal engagement, By Dennis Hastert and Dick Gephardt, June 10, 2012 10:56 pm, Financial Times, www.ft.com

Federal budget revenues in the US have fallen from 18.5 per cent of gross domestic product in 2007 to a projected 15.8 per cent in 2012, while federal spending levels have risen from 19.7 per cent to a projected 23.4 per cent, according to the CBO.