By Rebecca Wilder at News N Economics (via Prieur du Plessis) (Guest Post)
I present some basic statistics to highlight the problem in Europe. In short, there exists a deleterious positive feedback loop between overly leveraged banks and their sovereigns in key markets.Exhibit 1: European Banks are overly levered. Spanning 2006 through the latest data point, key European banking systems – France, Germany, and Italy – increased leverage. The chart above illustrates the ratio of bank assets to capital (see the IMF’s Financial Soundness Indicators for the data and description of…
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