gainspainscapital.com / By Graham Summers / October 23, 2012
As noted earlier in yesterday’s article, the entire European banking and corporate system is over-burdened with debt.
Germany sports a real Debt to GDP of over 200% (this from the former head of the Bundesbank), and the rest of Europe is in even worse shape.
Indeed, Jagadeesh Gokhale of the Cato Institute puts the situation as the following, “The average EU country would need to have more than four times (434 percent) its current annual gross domestic product (GDP) in the bank today, earning interest at the government’s borrowing rate, in order to fund current policies indefinitely.”
Suffice to say, no EU country has that kind of money lying around.
Moreover, the argument that the ECB or Federal Reserve could stop this from happening is misguided. True, the Central Banks have managed to prop up the markets for several years now.