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Sunday, June 24, 2012

Forget the PIIGS, the EU as a Whole is Insolvent | ZeroHedge

Europe is heading into a full-scale disaster.
 You see, the debt problems in Europe are not simply related to Greece. They are SYSTEMIC. The below chart shows the official Debt to GDP ratios for the major players in Europe.
As you can see, even the more “solvent” countries like Germany and France are sporting Debt to GDP ratios of 75% and 84% respectively.
 These numbers, while bad, don’t account for unfunded liabilities. And Europe is nothing if not steeped in unfunded liabilities.
 Let’s consider Germany. According to Axel Weber, the head of Germany’s Central Bank, Germany is in fact sitting on a REAL Debt to GDP ratio of over 200%. This is Germany… with unfunded liabilities equal to over TWO times its current GDP.
 To put the insanity of this into perspective, Weber’s claim is akin to Ben Bernanke going  on national TV and saying that the US actually owes more than $30 trillion and that the debt ceiling is in fact a joke.
 What’s truly frightening about this is that Weber is most likely beingconservative here. Jagadeesh Gokhale of the Cato Institute published a paper for EuroStat in 2009 claiming Germany’s unfunded liabilities are in fact closer to 418%.
 And of course, Germany has yet to recapitalize its banks.
 Indeed, by the German Institute for Economic Research’s OWN admission,German banks need 147 billion Euros’ worth of new capital.
 To put this number into perspective TOTAL EQUITY at the top three banks in Germany is less than 100 billion Euros.
 And this is GERMANY we’re talking about: the supposed rock-solid balance sheet of Europe. How bad do you think the other, less fiscally conservative EU members are?
 Think BAD. As in systemic collapse bad.

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