But now, suddenly the "Sleeping Beauty Europe" discovers to be sleeping with the EUR18 trillion nuclear banking bomb? Well, I was somewhat sceptical about the article in the UK's Telegraph, as the picture of - armageddonist of modern mythology - Evans-Pritchard appears on the same page, but note the web link: http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4590512/European-banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns.html. Those trillions on Telegraph's web-page are assumed to be British pounds, as the link on the right side of page (and that link appears to be broken) suggests. It appears like European Intelligence Services (what-ever) have been quick to remove that form the public eyes ...
However, the analysts at Societe Generale came out with a research note on ECB Watch "Thinking the unthinkable: Can a country leave European Monetary Union?", that research note should be available from this portal of Economic Research. And they wrote:
But there are certainly risks. On Wednesday the Daily Telegraph reported what it claims is a leaked European Commission document that estimated that the impaired assets amount to 44% of European Union bank assets. This would put the total figure for such assets at EUR18tr or about 150% of total European Union GDP. This is a huge sum of money, far in excess of what most European Governments are willing or able to take on. Ultimately there are limits to the amounts of assistance governments will offer to the banking sector which suggests such losses may have to be borne by the private sector. This is a recipe for long period of negative growth reminiscent of Japan's lost decade but not necessarily a recipe for Government default or the break of monetary union.Ohhhh Lord...
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