Thursday, October 6, 2011

Europe: It's Time To Be Scared

Used Under Creative Commons License
Capture Queen

To my friends, family and acquaintances in Europe:

Be afraid.  Be very, very afraid.

The European Banking system is reaching a tipping point – on the verge of complete collapse - and if some of the continent’s largest banks are not carefully dismantled or dissolved, the entire continent, and thus, the world, is staring at an economic threat so huge it will make the US housing collapse look like child’s play.  

Think I’m being melodramatic?   There are banks in Europe that have already begun to fail whose assets are LARGER than the Total Annual Gross Domestic Product of the entire COUNTRY that is trying to rescue them.  Yes… you read that right… there are failing European banks that are BIGGER than the ENTIRE ECONOMY in the country where they’re located.

Take a look at this scary chart:


There is ONE BANK per country (two in the case of Italy) whose assets surpass the GDP of their host country.

I’m not saying that all of the banks listed are in danger of collapse, but it may only take one to have the entire world economic system come unraveled like a poorly knit sweater. 

Are you ready to be really scared now?  Rumors are circulating that Dexia - - yes, the bank whose assets are 89% larger than the entire GDP of BELGIUM - -will soon need ANOTHER bailout.  

France and Belgium will be bailing out Dexia again - - even though Belgium’s debt to GDP is over 100%, and France’s is about 90%.  Where is this money going to come from?  Yes monsieur taxpayer – vous (you / tĂș / dich).  

Privatizing gains and socializing losses is one way to guarantee that you’ll get more of the same.  STOP BAILING THE FAILING!  (I like the sound of that :-)  

Is it time to stock up on gold, guns and ammo yet?  :-/

UPDATE: Chart replaced.  Astute reader @David_Eaton pointed out an error in the Bank Assets column... change does not affect the important column - - the fact that these banks are larger than their host countries entire economy.  


  1. The numbers look wrong to me- the table lists Spain's GDP as over a million billion dollars, and the bank assets as just over a thousand billion dollars- A trillion is 1x10^12, right? So the number in Spain's GDP must be in millions for it to be a smaller number by 8% than the bank assets, and looking on line, Spain is said to have 1.5x10^12 dollar GDP. So the columns are not right, exactly, though the data (properly scaled) you are trying to show is right.

  2. @David... you are correct... I'm off by 10^3 in my scale of the bank assets.

    It's like I'm a politician or something... and big numbers baffle me. :-)

    Thanks for catching this... I'll update ASAP.

  3. Enjoy the blog, BTW. I figured out what you meant pretty quickly, and everybody who looks at data probably has a story about a misplaced decimal somewhere...