20 Signs Of Imminent Financial Collapse In Europe – Part 2

Continued from Page 1


The yield on 2 year Portuguese bonds is now over 15 percent. A year ago the yield on those bonds was about 4 percent.


Portugal, Ireland and Italy now also have debt to GDP ratios that are well above 100%.


Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about3 trillion euros combined.


Major banks in the “healthy” areas of Europe could soon see their credit ratings downgraded. For example, there are persistent rumors that Moody’s is about to downgrade the credit ratings of several major French banks.


Most major European banks are leveraged to the hilt and are massively exposed to sovereign debt. Before it fell in 2008, Lehman Brothers was leveraged 31 to 1. Today, major German banks are leveraged 32 to 1, and those banks are currently holding a massive amount of European sovereign debt.


The ECB is not going to be able to buy up debt from troubled eurozone members indefinitely. The European Central Bank is already holding somewhere in the neighborhood of 444 billion euros of debt from the governments of Greece, Italy, Portugal, Ireland and Spain. On Friday, Jurgen Stark of Germany resigned from the European Central Bank in protest over these reckless bond purchases.


According to London-based think tank Open Europe, the European Central Bank is now massively over leveraged.

“Should the ECB see its assets fall by just 4.23pc in value . . . its entire capital base would be wiped out.”


The recent decision issued by the German Constitutional Court seems to have ruled out the establishment of any “permanent” bailout mechanism for the Eurozone. Just consider the following language from the decision.

“No permanent treaty mechanisms shall be established that leads to liability for the decisions of other states, especially if they entail incalculable consequences”


Economist Nouriel Roubini is warning that without “massive stimulus” by the governments of the western world we are going to see a major financial collapse and we will find ourselves plunging into a depression.

“In the short term, we need to do massive stimulus; otherwise, there’s going to be another Great Depression”


German Economy Minister Philipp Roesler is warning that “an orderly default” for Greece is not “off the table”.