Saturday, September 11, 2010

European Bank Exposure to EU Government Debt

According to WSJ, European banks hold $1.9 trillion in debt from the governments of EU countries.

Most alarming is that this is not a stagnant number, deficits are climbing at most EU countries. At some point the system will be stuffed with EU debt, just like U.S. debt will totally overload the system. It is difficult to see anyway out other than a major globall government debt restructuring (i.e. bankruptcy) or a huge inflation.

Global debt restructuring is, of course, the way to go.  History teaches, however, that government leaders will choose inflation.

1 comment:

  1. i am glad europe can't use "extend and pretend" policy b'cos of their currency. I am so sick of US screwing savers for the past 20 years, with FED low rate bubble policies.