Risk Transfer.

The "socialism of losses" continues on the other side of the Atlantic. The U.S. had its round of bail-outs (together with a litany of other rescues, assistance, guarantees, etc. all "provided" by the taxpayer by their benevolent and wise representatives and appointees) and now the Euro area is experiencing what it looks like when the ugly process of "Bank Re-capitalization" churns on.

Crédit Agricole, one of France's biggest banks, has used ECB loans to whittle down its financial exposure to its troubled Greek subsidiary, Emporiki. After extending more than €10 billion of loans to Emporiki, Crédit Agricole last year decided essentially to cut its losses and is instead trying to get central banks to lend money to Emporiki. Due to its foreign ownership, though, the Greek central bank has barred Emporiki from borrowing from an emergency-lending facility that other Greek banks have been tapping, according to a person familiar with the matter.

But Emporiki borrowed from the ECB. At the end of December, after the ECB's first batch of three-year loans, Emporiki had borrowed €1.8 billion from the ECB, according to Crédit Agricole. Crédit Agricole, meanwhile, reduced its loan exposure to Emporiki to €5.5 billion. It is unclear how much Emporiki borrowed from the ECB last week.