World Affairs Brief: EURO IN TROUBLE AS G20 TALKS FAIL – next Summit Oct 23

“The top 4 banks: account for 94.4% of total derivative exposure.

JPMorgan with $78.1 trillion

Citibank with $56 trillion,

Bank of America with $53 trillion

Goldman with $48 trillion

World Affairs Brief, October 21, 2011

Commentary and Insights on a Troubled World.

Source: Joel Skousen’s World Affairs Brief

The Wall Street Journal was the bearer of bad news on the Euro debt front: “The euro took a hit Monday as German leaders tempered hopes that an upcoming summit would lead to a deal resolving the continent’s sovereign-debt crisis. A summit of 27 European Union leaders is taking place on Oct. 23 and market participants were hoping it might lead to a convincing response to euro-zone debt woes. The euro had surged to a one-month high against the dollar as investors counted on plans for a resolution to the crisis, but it abruptly reversed course as German leaders made clear that solving Europe’s problems won’t be so simple.”

In fact, by Wednesday, the Germans had admitted that the talks have failed and that no permanent solution to the debt is coming. Once again, I wouldn’t count the EU dead just yet. Failure is one thing the globalists don’t accept. They engineer an even larger crisis if that is what it takes to turn this around and scare people into accepting what they now view with disgust.

Even Britain is suffering the contagion from Europe. The UK Telegraph said, “The Ernst & Young ITEM Club, which uses the Treasury’s forecasting models, warns today that the economic situation is ‘worse than we thought’. It concludes that the ‘bright spots’ in Britain’s economic recovery have ‘dimmed to a flicker’ because of the ongoing crisis in the single currency.”

There is more evidence emerging about US bank exposure to EU debt. reported that “Morgan Stanley has a $39 billion gross derivative exposure to French banks.” Others are deep into this too. Zerohedge explains:

“The latest quarterly report from the Office Of the Currency Comptroller is out and as usual it presents in a crisp, clear and very much glaring format the fact that the top 4 banks in the US now account for a massively disproportionate amount of the derivative risk in the financial system.

“Specifically, of the $250 trillion in gross notional amount of derivative contracts outstanding (consisting of Interest Rate, FX, Equity Contracts, Commodity and CDS) among the Top 25 commercial banks (a number that swells to $333 trillion when looking at the Top 25 Bank Holding Companies), a mere 5 banks (and really 4) account for 95.9% of all derivative exposure (HSBC replaced Wells as the Top 5th bank, which at $3.9 trillion in derivative exposure is a distant place from #4 Goldman with $47.7 trillion).

“The top 4 banks: JPMorgan with $78.1 trillion in exposure, Citi with $56 trillion, Bank of America with $53 trillion and Goldman with $48 trillion, account for 94.4% of total exposure. As historically has been the case, the bulk of consolidated exposure is in Interest Rate swaps ($204.6 trillion), followed by FX ($26.5TR), CDS ($15.2 trillion), and Equity and Commodity with $1.6 and $1.4 trillion, respectively.

“And that’s your definition of Too Big To Fail right there: the biggest banks are not only getting bigger, but their risk exposure is now at a new all time high and up $5.3 trillion from Q1 as they have to risk ever more in the derivatives market to generate that incremental penny of return.”

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Copyright Joel Skousen


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