Europe on the Brink

Investors Insight ^ | 07-19-2009 | John Mauldin

[george76]

World trade is down 20% or more. US railroad shipments are down more than 20% year-over-year.

Europe's banks have been much more aggressive in funding emerging-market expansion than US or Japanese banks.

Europe's banking system is in far worse shape than the US system. The losses may be bigger, and their capital to meet those losses is certainly less. Let's look at some charts. Remove sharp objects or pour another adult beverage.

And Then There Was Leverage.

Thirty times leverage means that if you lose 3.3%, you wipe out all your capital.

Regulators in the UK allowed 20:1 leverage on a regular basis. It is now almost 40: and with TCE is around 55. The assets of UK banks are about five times as large as UK GDP. By comparison, for the US the ratio is barely 2:1.

Think about that for a second.

The UK has banking assets which are five times as large as the annual domestic output of the country. They also had a housing bubble...

But as the commercial says, "But wait, there's more!" Let's look at the Eurozone.

Leverage is now 35:1 and with TCE is almost 55. How did 35:1 work out for the US?

Unemployment is at 9.5% and going to 11% and hopefully no higher. Average hours worked per week is at an all-time low. The number of people working part-time but wanting full-time work is another 7%! And that part-time number is rising very rapidly.

And this Congress wants to raise taxes on small business. 75% of the "rich" are small businesses. How do you expand your business in California or New York, where taxes will be over 60% by the time you add in local taxes?

[jveritas]

Europeans in general do not talk about their disasters but rather they spend their time cheering the US problems and try to delude themselves that they are better than us.

[autumnraine]

And they convince the liberals who worship all things European.

[george76]

Unemployment in Europe is rising fast and shows no signs of abatement...for example Spain at 19% and Latvia at 16%.

[jveritas]

Yes, our liberals look at Europe like their idol but very few of them our willing to trade the American standards of living with the European standards of living.

[george76]

With the escalation of money printing markets will be flooded with government paper which nobody wants, leaving governments to buy its own junk

[WashingtonSource]

The-end-is-near bump

[hoosier hick]

The charts on bank leveraging are REALLY sobering....

hh

[george76]

The Fourth Turning offers this bold prophecy

http://www.fourthturning.com/html/fourth_turning.html

[autumnraine]

I had a German woman in the late 80’s that was visiting her American cousins express a little shock when we discussed showering and someone mentioned how they couldn’t go a day without one. She said “You take showers everyday?”

Now that’s not to say everyone there lives like that, but in THIS case, these people who had enough money to fly to America to visit, lived in an apartment building where they had wash up sinks and then they shared a shower with the building. She also found it a luxery to be able to take a soaking bath on a regular occassion.

Now a friend of mine whose husband was stationed in Germany told me that it wasn’t true, that she lived in Germany and she had a shower in her apartment. In another conversation a few months later she mentioned living on the base and I asked if he ever lived anywhere else while he was stationed there. The answer was no, I guess forgetting the conversation about how Republicans no nothing about Europe. She lived on a BASE!

I have not been there. I do not know for a fact, only what this German family said and maybe they lived in a poorer section of town. I just know they thought we had waaayyyy too much space for one little family. I mean her middle class cousins had a front yard AND a back yard and TWO STORIES ON THEIR HOUSE!

[LucyT]

Thanks, george 76.

Ping to #9.

Europe on the Brink

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[Richard Kimball]

Yes, our liberals look at Europe like their idol but very few of them our willing to trade the American standards of living with the European standards of living.

Beats trading with Kenya, which is where we'll be going if we don't make some changes.

[Little Ray]

I lived with a German family in the ‘70s as part of an exchange - they thought I was crazy taking a shower every day!

[jveritas]

There is no doubt that the Europeans have lower living standards than us. First of all for comparative jobs they make less salaries, they pay more in taxes, and everything they buy is much more expensive than in the US including their own products that are cheaper to buy here in the US than their own countries. In other word our purchasing power is vastly superior to them. They live in smaller homes, in most cases much smaller homes, they drive much smaller cars, they eat out much less, etc...

To summarize thanks the Lord that we live in America the greatest and most prosperous nation in history of mankind.

[jveritas]

God Bless America.

[arthurus]

America the greatest and most prosperous nation in history of mankind.

Now add Cap and Trade, Government Health Care, Government takeover of Manufacturing and Finance, Amnesty...

America the greatest and most prosperous nation in history of mankind.

For a little while yet.

[autumnraine]

Thanks for the ping on this Lucy. I have quite a bit of work to search through on this site!

[Vanders9]

Don’t you believe it. I’m a European and most of us are only too aware that when “Wall street sneezes, Europe catches a cold”. These days its likely to be a full blown flu.