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Tuesday 3 October 2023 Dublin: 11°C
AP Photo/Thierry Charlier Grand Place, Brussels, Belgium
# Belgium
Belgium: Things are getting worse by the minute
A Belgian reader emails his take on the latest worrying developments there – and what action the country’s political leaders need to take.

WHAT THE HECK is going on in Belgium?

We mentioned earlier how spreads are blowing out at a frightening clip.

A Belgian reader sends us in the latest:

Today, Belgium has been without a government with full authority for more than 527 days. Things are getting worse by the minute:

  1. Dexia – which has been nationalised on taxpayer’s expense – is trading around €0.30 a share;
  2. Belgium’s interim government (which does not have full authority) finally realizes that the price paid to the French for the Belgian part of Dexia is way too high (€4 billion) and, worse, that the guarantees provided by the Belgian taxpayer are unrealisable (almost €55 billion). Therefore, they are looking to re-negotiate parts of the deal with France. Why the French would be willing to accept other terms (and risk their AAA-rating) is a mystery for me;
  3. This morning, calculated that the sum of all guarantees provided by Belgium to its banking sector amounts to an astonishing €130 billion. To put this number in perspective: Belgium’s GDP in 2010 was approx. €353 billion . Let’s hope not all of these guarantees will be claimed, otherwise…
  4. Elio Di Rupo (Parti Socialiste) – who was trying to form a new government – offered his resignation to our King Albert II on Monday  after criticism from the Liberal party (OpenVLD) and other stakeholders (among others: Belgian entrepreneurs) that the proposed reforms are too much “taxing” and too little “reform”. This criticism has many followers in the Flemish part of Belgium, much less in the French part (Wallonia). So, after 527 days, it seems like not that much has happened, apart from endless talks about topics which do not impact the everyday lives of the Belgians;
  5. The yield-spread between German/Belgian 10-year bonds is rapdily increasing (300 basispoints +) and our current 10-year yield is exploding higher (as we speak: approx. 5.14 per cent);
  6. After Dexia’s share decline brought down Arco (a cooperative related to the Catholic trade union and labor movement which only a couple of weeks ago went bust but, nevertheless, got bailed out by the Belgian taxpayer although technically these were “shareholders” and not “savings-accounts”), today, it seems other cooperatives are getting into serious trouble due to the declining shareprice of the bank in which they were invested. CERA, cooperative which owns shares of Belgian bank and insurance company “KBC Bank” is currently considering if they will apply for a government guarantee. CERA is virtually bankrupt as their KBC-holdings are valued at 31 EUR on their balance sheet while KBC is currently trading around €8.80.

Conclusion: although it’s always darkest before dawn, I hope our political “leaders” will soon find the courage to take the highly necessary measures:

  1. to modernise the decision-making-procedures of this country;
  2. to put a cap on government spending and reduce our national debt ASAP;
  3. to find a solution to our very costly social security system (restricting unemployment benefits in time would be a good start);
  4. to re-energise our country: we are way too depended on foreign nations for our energy supply;
  5. to stop giving guarantees to each and every financial group which gets into trouble;
  6. to offer a perspective to its citizens which is worth some sacrifices;
  7. to stop talking about “solidarity” when all they mean is “those who want to work will be taxed so we can give it to those who do not (want to) work”;
  8. to encourage and reward entrepreneurship (“Some see private enterprise as a predatory target to be shot, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon”, W. Churchill);

Best regards,


- Joe Weisenthal

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