The European Financial Crisis In One Graphic: The Dominoes Of Debt
by Charles Hugh Smith
The dominoes of debt are toppling in Europe, and there is no way to stop the forces of financial gravity.
After 19 months of denial, propaganda and phony fixes, the political and finance leaders of the European Union are claiming a “comprehensive solution” will be presented by Wednesday, October 26— or maybe by the G20 meeting on November 3, or maybe on Christmas, when Santa Claus delivers the gift global markets are demanding: a “solution” that actually pencils out and that forces monumental writeoffs of debt and thus equally monumental losses on European banks and bondholders.
There have been any number of insightful descriptions of what’s going on beneath the artifice, spin and lies, for example:
Four Facts that PROVE the EFSF (rescue fund) Doesn’t Matter At All (Zero Hedge)
Revised Troika Forecast Sees Total Greek Debt-To-GDP Peaking At 186%: Here Is What Happens Next (Zero Hedge)
There Is No Bailout Spoon: The Math Behind The €2 Trillion EFSF Reveals A “Pea Shooter” Not A “Bazooka” (Zero Hedge)
Citi Expects A 76% Haircut On Greek Debt (Zero Hedge)
EU Bank Stress Test: When No. 1 Financial-Strength Ranking Spells Doom (Bloomberg)
I have summarized the fundamentals in this one graphic: the European dominoes of debt. Simply put, there is no way the EU authorities can stop the first domino–Greek default or equivalent writedown of its impossible debt load–from toppling the over-leveraged banks which will be rendered insolvent when forced to recognize their losses.