While there hasn’t been a lot of talk about it, the recent downgrade of French banks could end up being a big deal, says Kevin Van Trump, market analyst and marketing blogger on AgWeb.com. France’s Société Générale is one of the oldest banks in the country and has a huge global presence. It provides lines of credit for thousands in the hedge fund industry.
“Many believe the U.S. government bailed out AIG in order to keep SocGen from taking
an estimated $11 billion hit,” Van Trump says. “With so many lines of hedge fund credit being tied to SocGen, you have to believe that any type of major issues in liquidity will force it to tighten its lines and reel back credit extended to the funds,” he says.
“If something like that plays out, it will rock the corn market more than any yield data reported by USDA,” he says. “We still have to keep a close eye on developments in Europe.”
- October 2011