Europe’s banks face a $2 trillion dollar shortage
European banks face a US dollar “funding gap” of almost $2 trillion as a result of aggressive expansion around the world and may have difficulties rolling over debts, according to a report by the Bank for International Settlements.
Europe’s economic situation:
- Eastern Europe, along with Russia and the Ukraine, are toppling over the edge. Austria, whose banks have lent them €230bn (75% of its GDP) will go with them.
- Eastern Europe owes $1.7 trillion, $400 billion is due this year.
- Russia has a $500 billion tab it may not be able to cover.
- 60% of Polish mortgages are in Swiss francs, against which the zolty was just halved.
- Hungary, the Balkans, and the Baltics are in the same boat.
- Nearly all this debt is owed (and won’t be paid) to Austrian Belgian, Greek, Italian and Swedish banks.
- In addition, Europeans hold 74% of the nearly $5 trillion of emerging markets’ debt.
- The German economy will shrink nearly 10% this year, so Berlin will not be rescuing anybody either, not even partners Greece, Italy Ireland, Portugal or Spain.
- The coming economic stress is the stuf that makes for pitchforks in the street.
Meanwhile Ukraine’s gross domestic product has contracted by 20pc over the last year, apparently worse than early Bolshevism or the Stalin famine . . . if Ukraine defaults on its foreign debt – or lets its private companies default on their dollar and euro loans – it will lead to near instant contagion through much of Eastern Europe.
“This is your captain speaking, everyone remain calm, everything is under control. “