Expect the Euro to crash and crash hard. Don't take it from me, though. Ask Mark Blyth:
What actually happened in Europe was that over the decade of the introduction of the euro, very large core-country European banks bought lots of peripheral sovereign debt (which is now worth much less) and levered up (reduced their equity and increased their debt to make more profits) far more than their American cousins. Being levered up, in some cases forty to one or more, means that a turn of a few percentage points against their assets can leave them insolvent. as a consequence, rather than being too big to fail, European banks, when you add their liabilities together, are "too big (for any one government) to bail," a phenomenon that the euro, as we shall see, only exacerbates.
France's biggest three banks, for exempt, have assets worth nearly two and a half times French GDP. In contrast, the total value of the entire US banking sector is about 120 percent of GDP. The United States can print its way out of trouble because it has its own
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I completely agree and with every bit of news that comes out, | fear that we are not far away from another financial crisis that is going to affect us all eventually. If just one of these banks cracks it might just be the straw that breaks the camel's back.
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What actually happened in Europe was that over the decade of the introduction of the euro, very large core-country European banks bought lots of peripheral sovereign debt (which is now worth much less) and levered up (reduced their equity and increased their debt to make more profits) far more than their American cousins. Being levered up, in some cases forty to one or more, means that a turn of a few percentage points against their assets can leave them insolvent. as a consequence, rather than being too big to fail, European banks, when you add their liabilities together, are "too big (for any one government) to bail," a phenomenon that the euro, as we shall see, only exacerbates.
France's biggest three banks, for exempt, have assets worth nearly two and a half times French GDP. In contrast, the total value of the entire US banking sector is about 120 percent of GDP. The United States can print its way out of trouble because it has its own ( ... )
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Credit Suisse just cracked
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If just one of these banks cracks it might just be the straw that breaks the camel's back.
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