[BlueGhostNo2]

The excellent FT alphaville blog has a story today which is interesting.

According to a hastily deleted news story in the Telegraph European banks could have upto 44% impaired assets on their balance sheets.

[url="http://ftalphaville.ft.com/blog/2009/03/05/53238/absolute-suicide-watch/"]*gulp*[/url]

[pedalling_faster]

http://www.telegraph.co.uk/finance/fina ... warns.html

well, at least the Telegraph still has part of the article up.

with the important numbers excised, but the info is in the web page title - and in the title for one of the links - "'Toxic' EU bank assets total £16.3 trillion"



Absolut Suicide Watch ?

[davep]

I read somewhere today that the figures for the Telegraph article were way out and included the total gross borrowing, including from banks to their subsidiaries etc. According to the article, the real exposure is about a tenth of that suggested initially.

I'll keep hunting for the article tomorrow morning.

[pedalling_faster]

I'll keep hunting for the article tomorrow morning.

well, i appreciate your taking the time to hunt for it.

but the $25 trillion/ 16 trillion pound number (for bank losses) has been out for a few weeks now.

possibility #1 - it was all a big mistake, they've had time to study the numbers, and the real numbers for Euro bank losses are ... smaller numbers

possibility #2 - the Powers That Be have decided to sweep the original news under the rug.

which possibility is more plausible ?

now that i think about it, i think John Mauldin reported on this.

"On the 11th February the Daily Telegraph's Brussels correspondent Bruno Waterfield wrote an article under the header: "European banks may need £16.3 trillion bail out, EC document warns." In the article, the reporter revealed that he has seen a secret document produced by the EU Commission which briefed the union's finance ministers on the true extent of the banking crisis. Less than 24 hours later, the article's header was changed to "European bank bail-out could push EU into crisis" and two paragraphs had mysteriously disappeared. Here they are:

"European Commission officials have estimated that "impaired assets" may amount to 44pc of EU bank balance sheets. The Commission estimates that so-called financial instruments in the 'trading book' total £12.3 trillion (13.7 trillion euros), equivalent to about 33pc of EU bank balance sheets.

In addition, so-called 'available for sale instruments' worth £4trillion (4.5 trillion euros), or 11pc of balance sheets, are also added by the Commission to arrive at the headline figure of £16.3 trillion."

Do yourself a favour - read those two paragraphs again. Newspaper editors do not change content light-heartedly. Did the Telegraph editor receive a call from Downing Street? Or Brussels? Did he have second thoughts about the avalanche that he could possibly instigate? I don't know and I probably never will. But one thing is certain. If the EU Commission's estimate of £16.3 trillion of impaired assets is correct, then the crisis is far worse than any of us could ever imagine. Not only would we have to get used to the prospects of a systemic meltdown of our banking system, but entire nations may go down as well."

oh, i could use a drink tonight.

[retiredguy]

One of the regular guests on CNBC tonight (don't recall name) stated flatly that European banks had $24 trillion of bad debt on the books.

[davep]

which possibility is more plausible ?

I was just quoting what I remember from the article. I didn't say I agreed with it!