Tuesday, June 18, 2013

18/6/2013: The Size of the Eurotanic's Bad Assets Iceberg?

Europe's Non-Performing and Doddgy Banking Assets are a Mount Everest-sized iceberg that no analyst in the Commission or the IMF or the BIS or the ECB or any National Central Bank or... ok, keep inserting official sources, is capable of recognising or estimating.

Thankfully, here's a handy range:

1) Courtesy of the ZeroHedge: http://www.zerohedge.com/news/2013-05-17/europes-eur-500-billion-ticking-npltime-bomb the Eurotanic is heading straight into a EUR500bn chunk of ice.
2) Courtesy of Les Echos, it's EUR1,000bn: http://www.lesechos.fr/entreprises-secteurs/finance-marches/actu/0202834793278-une-bombe-de-1-000-milliards-d-euros-pour-les-contribuables-europeens-576506.php and that's just for 'bad banks'.
3) My own view - the number is well ahead of both. This is a consistent view expressed as early back as, for example, http://trueeconomics.blogspot.ie/2010/05/economics-16052010-eu-on-brink.html and even earlier. Euro area will require some EUR3 trillion in monetary 'assistance' of permanent (or very long-term) nature. The drivers for this are: (a) legacy bad and poor quality assets, (b) stagnation-induced corrections yet to come, and (c) interest rates and ECB exit-induced household and corporate insolvencies crunch looming on the horizon.

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