Yep.. that's the other shoe to drop.. We myopically focus on our own banking excesses without recognizing that European banks are even more highly leveraged. Then combine that with many of them possessing liabilities in excess of their host nation's GNP, and an ECB that, as I understand it, has no charter to provide the same manner of support that the Federal Reserve does for US bank, and you have a recipe for a tremendous disaster in Euroland.
And we hear the Chinese gloating about their own financial system, while ranting about the flaws in ours, when it's widely known that many of their banks have issed tremendous quantities of non-performing loans of their own. And they ignore the fact that it was primarily their money, gained by selling stuff into our markets, that purchased many of those mortgage backed securities. All because they didn't want their currency to appreciate.
Again.. I think the metaphor still holds.. When the US catches a cold, the rest of the world will eventually catch Pneumonia.
So the question is.. Can a quick shot of antibiotics keep this financial "bronchitis" from turning into full blown pneumonia??
Or is this situation really a virus for which, like the cold, has no cure and must be permitted to run its course?
Right now, I'm really hoping it's "bacterial" (with the supranational hedge funds and private equity representing the bacteria to be "contained".. ;0)
But I have no illusions that it might turn out to be viral.
However, the ultimate question is whether the world is going to rely upon the US to be the financial doctor, or is this going to be a combined medical effort?
How's that for dragging out a metaphor ad infinitum.. ;0)
Hawk |
