Economist Mike Whitney writes:
To get some idea of how much European banks are "leveraged," one has only to examine the following data:
In the United Kingdom, the amount of "bank leverage" is about 55:1.
Think about that for a second: That means that for every $55.00 UK banks have lent out, they possess only $1.00 with which to back their loans if borrowers default - which they are now doing on a massive scale. That means that if there is a "margin call" (as it were) on only 2.5% of the outstanding loans that British banks have made over the years, the banks in Britain will collapse.
In the so-called Euro-zone, the situation is similar: banks there are also "leveraged" at 55:1; again, that means that if there is a "margin call" (as it were) on only 2.5% of the outstanding loans that EU banks have made over the years (especially to Eastern Europe), the banks in the EU will collapse.
And one should bear in mind here that there is no overall Central Bank in Europe similar to the Federal Reserve in the United States - or, for that matter, the Bank of England in the UK which, undoubtedly, the U.S. Federal Reserve would back - that could step in and save the situation.
There is only one nation in the Euro-zone with the financial power to step in to save the banks there: Germany. Unfortunately, Germany does not have the wherewithal to step into every situation; this presents Germany with a nightmarish political conundrum: How does Germany choose between, for example, saving a Spanish bank and not an Austrian bank? Austria's banks have made large loans to Eastern Europe, in euros and Swiss francs, and are going to have large losses, far more than the 2.5% of debt (see above) that it would take to wipe out their capital. And Austria is a small country in the Euro-zone. What if banks in Italy, Spain, Greece, the Netherlands, etc. begin to fail? What happens then? Germany can't save them all.
Germany's GDP is only 22% of U.S. GDP - AND GERMANY CAN'T CREATE "FUNNY-MONEY" THE WAY THE U.S. DOES IN ORDER TO MEET ITS "OBLIGATIONS." Only the U.S. - as the world's economic and military hegemon, and in accordance with IMF rules - can do that! [Please see our DVD, "Greed Is Good;" please also see our article, "Inside the American New World Order System."]
Finally, there is Switzerland (which is not in the Euro-zone), a country with a supposed reputation for prudence; the amount of bank "leverage" there is almost 70:1 - which means that if there is a "margin call" on only 1.5% of the outstanding loans that Swiss banks have made over the years, the banks in Switzerland will fail.
To begin to understand the enormity of the problem, consider this: The banking crisis in the U.S. will eventually demand a "fix" that will amount to twice the U.S. GDP. In the Euro-zone, however, it will take four times its combined GDP to "fix" the banking problem; in Britain, it will take five times its GDP to "fix" the problem; in Switzerland and Ireland it will take seven times their GDP to "fix" the problem. And so it goes.
It's precisely for this reason that Whitney has written:
The collapse of Eastern Europe will set off a chain reaction and bring down Western Europe ... This depression is spreading out of control like the recent wild fire in Australia.
Obviously, then, WE ARE ON THE KNIFE EDGE OF A EUROPEAN COLLAPSE! - AND IF RIOTING ON A MASSIVE SCALE BEGINS THERE, EUROPE'S UNDER-FUNDED, MINISCULE ARMIES AND POLICE FORCES WILL NOT BE ABLE TO HANDLE THE CHAOS.
THERE IS ONLY ONE NATION WITH THE POWER TO STEP IN TO END THE RIOTING AND TRUMOIL: THE UNITED STATES. One should remember here: The most powerful army in Europe is not the German army, or the French army, or the Italian army, but the American army in Europe!!