Three Data Points That Prove Europe Cannot Be Saved…(Get Ready For “Mushroom Clouds”)
by Phoenix Capital Research
I continue to see articles in the media claiming that Europe’s problems are solved. Either the folks writing these articles can’t do simple math, or they don’t bother actually reading any of the political news coming out of Europe.
Here are three data points that GUARANTEE Europe will collapse at some point in the near future:
Fact #1: EU Banks as a whole are leveraged at 26 to1.
This is, of course, based on the assets the banks are reporting. According to independent sources, the leverage levels are in fact far, far greater than this (though 26 to 1 is already bordering on Lehman Brothers’ leverage levels).
Indeed, as far back as September 2011, PIMCO’s Co-CIO, Mohamed El-Erian (one of the most connected of the financial elite) noted that French Banks were running REAL leverage levels of almost 100-to-1.
El-Erian said French banks are a particular cause for concern, noting that “credit markets now put their risk of default at levels indicative of a BB rating, which is fundamentally inconsistent with sound banking operations.” He adds that bank equity now trades at a 50% discount to tangible book value on average, while the ratio of market capital to total assets has fallen to 1%-1.5%, compared with 6%-8% for “healthier banks.”