European Central BankEuropean Banks May Need Massive Bail-Out -- The Telegraph
European banks sitting on £16.3 trillion of toxic assets may suffer massive losses, according to a confidential Brussels document.
A secret 17-page paper discussed by finance ministers, including the Chancellor Alistair Darling on Tuesday, also warned that government attempts to buy up or underwrite such assets could plunge the European Union into a deeper crisis.
National leaders and EU officials share fears that a second bank bail-out in Europe will raise government borrowing at a time when investors - particularly those who lend money to European governments - have growing doubts over the ability of countries such as Spain, Greece, Portugal, Ireland, Italy and Britain to pay it back.
“Estimates of total expected asset write-downs suggest that the budgetary costs – actual and contingent - of asset relief could be very large both in absolute terms and relative to GDP in member states,” the EC document, seen by The Daily Telegraph, cautioned. “
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My Comment: Since the Roman Empire, the armies of Europe have always had a symbiotic relationship with the financial wealth of its government and its people. When wealth and financial stability was the rule .... Europe prospered and was safe. When economic dislocation occurred, instability was the result followed by wars and conflicts.
Todays European governments have clearly lost control of economic and social policy. What makes this tragic was that this was predicted years ago by many doomsayers who were critical of the liberal/socialist agenda that was implemented after the Second World War. Free markets were replaced by government regulation and supervision. Financial and currency policy was put under one roof .... installed under the guise of fairness and security, but resulting in only propping up governments that failed in financial policy, and punishing those who acted responsibly.
And what we have today is a Europe whose fiscal and economic policy is at the brink .... an economic environment whose assets are not worth the paper that it is written on. The buildings may still be standing. The trains may still be running on time. But there are millions of victims whose savings and government entitlement programs are at risk or are now destroyed.
The riots in Greece, the Baltic States, and Iceland are a harbinger of things to come. Fueled by high unemployment and a sense that there is no future .... this environment of despair will soon enter the bigger countries, with England and France being the first to experience this frustration.
To respond to these developments, European Governments are scrambling to save money and to limit expenditures. As a result, the military is always the first to feel these cuts. But such cuts always have consequences .... and in Europe this has always led war.
Fortunately ... I personally doubt that war will break out in Europe. Turmoil in places like Bosnia, Kosovo, the Basque region .... this I expect. But war between European nation states I do not. Instead, the crippling of Nato and the downgrading of Europe's military will have consequenbces outside of its borders, and the cost will be steep.
Countries in Africa, the Middle East, the Israeli-Palestinian conflict .... they may look at the U.S. for help .... but they have also looked at Europe as their back-up plan. The wars in Darfur, the Congo, and elsewhere have been very bloody .... but the total would have been far greater if the European military presence was never there.
But the Europeans are now leaving .... unable and lacking the will to stay. So .... the question now arises .... who is going to fill this power vacuum. Unfortunately .... using the past as one's guidepost .... it is usually the worse of humanity that makes their presence known during these times.
And I do expect history to repeat itself again.