European banks May be in trouble

After the US banks, the european banks are very likely to be next as the ECB cannot launch a bigger rescue mission than the FED. The leverage ratio of those banks are over 50. It may be too easy to get into trouble for them.


According to Daniel Gross, director of the Centre for European Policy Studies in Brussels,

the crucial problem on this side of the Atlantic is that the largest European banks have become not only too big to fail, but also too big to be saved. For example, the total liabilities of Deutsche Bank (leverage ratio over 50!) amount to about €2,000bn (more than Fannie Mae) or more than 80 per cent of the gross domestic product of Germany. This is simply too much for the Bundesbank or even the German state, given that the German budget is bound by the rules of the European Union’s stability pact and the German government cannot order (unlike the US Treasury) its central bank to issue more currency. Similarly, the total liabilities of Barclays of around £1,300bn (leverage ratio 60!) are roughly equivalent to the GDP of the UK.....