Re:Brexit Is a Lehman Moment for European Banks
by adventured on Sunday July 10, 2016 @09:23PM
(#12068279)
It's more plausible that Europe is going to go through a much harsher next ten years than the last ten years have been (a time during which the EU and Eurozone both saw essentially zero net GDP growth). They've only added to their debt situation since the great recession, nothing has actually been fixed, and they will be unable to raise interest rates for the next decade at least - that combination will continue to suffocate all GDP growth, by locking up trillions in capital that will no longer be productive and will be stuck in a blackhole yielding a negative return for decades.
Italy for example is imploding on $300 billion in bad debts, which is likely to send their economy into a Spanish style depression. That's going to sink a lot of European banks. Deutsche Bank's lead economist is already calling for a $150 billion EU bank bailout. They're going to need something more like $500 billion as the financial picture gets worse in Europe in the next few years.
Finland as another example is in a nearly decade long soft-depression, and is likely to abandon the Eurozone as their situation will continue to drift and erode.
Countries like Sweden, Denmark, the Netherlands, and Norway, now have among the most indebted households on earth based on debt to income ratios. The mortgage debt accumulation going on there can't continue indefinitely.
Spain and Portugal have barely begun to pull out of the last recession, when a new one is inbound. Greece is still a hobbled mess.
Countries like France and Germany that are center to Europe's economy, have had zero growth for nearly a decade. Germany's ability to continue to bail out other parts of Europe, is now at an end.
It's far more likely Deutsche Bank will be quasi-nationalized, than not at this point. The next few years will be worse, rather than better.
Italy for example is imploding on $300 billion in bad debts, which is likely to send their economy into a Spanish style depression. That's going to sink a lot of European banks. Deutsche Bank's lead economist is already calling for a $150 billion EU bank bailout. They're going to need something more like $500 billion as the financial picture gets worse in Europe in the next few years.
Finland as another example is in a nearly decade long soft-depression, and is likely to abandon the Eurozone as their situation will continue to drift and erode.
Countries like Sweden, Denmark, the Netherlands, and Norway, now have among the most indebted households on earth based on debt to income ratios. The mortgage debt accumulation going on there can't continue indefinitely.
Spain and Portugal have barely begun to pull out of the last recession, when a new one is inbound. Greece is still a hobbled mess.
Countries like France and Germany that are center to Europe's economy, have had zero growth for nearly a decade. Germany's ability to continue to bail out other parts of Europe, is now at an end.
It's far more likely Deutsche Bank will be quasi-nationalized, than not at this point. The next few years will be worse, rather than better.