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The banking system of Europe is at the edge of the abyss. A brief story by The Telegraph revealed this last week. The original was almost immediately deleted. A new version was substituted.

You can see the original headline on Google:

European banks may need £16.3 trillion bail-out, EC document warns ...

http://www.lewrockwell.com/north/north689.html

Yep that's scary all right!

I'm pretty sure its still on Bruno Waterfields blog.

Theres E1.4t in Euro loans to Eastern Europe outside the Eurozone, mostly from Austria, Italy, Germany and Belgium, they're the current crisis point.

Eastern Europes currencies are all under attack now, so loan payments are up 30% on average, just as everyone is losing their job.
If memory serves Austria is in serious trouble over it, a 10% default rate will bring down its entire banking system.
Without sounding like a LATOCian, Austrias banking failure brought about the great depression

That wasn't the only changed article.

On the Telegraph page where the now-changed article is (still called http://www.telegraph.co.uk/finance/fina ... warns.html incidentally in the URL), is this link in the side bar:

'Toxic' EU bank assets total £16.3 trillion

Don't find anything?

They have changed the title AND the URL to EU faces 'toxic' debt spiral and the number has been removed.

However a couple of user comments raise the issue of the editing ...

As discussed here on Monday, the secret 17 page paper..."
If the figure of £16.3 trillion given in this version of the story is true, then it should be the front page lead. Junk debt on this scale could break the EU.
However, this detail was omitted in the later version.
Why?

http://blogs.telegraph.co.uk/bruno_wate ... ebt_spiral

Yep its gone, is the government handing out D notices over bad economic news?
Great...
Or what were those other ones they brought out recently?

I wonder whether Ed Balls had been privy to the content of the document prior to that speech of his on the weekend of 7-8 February.

http://news.bbc.co.uk/1/hi/uk/7880393.stm

Or had he just woken up with a start that morning and the sudden realisation that things are actually pretty bed?

So £19trillion or whatever has vanished, but remember that it was money conjured up by the fractional bankers not gold or bricks and mortar or anything useful. If it disappears it just puts us back where we were before the conjuring act, n'est pas?

biffvernon wrote:So £19trillion or whatever has vanished, but remember that it was money conjured up by the fractional bankers not gold or bricks and mortar or anything useful. If it disappears it just puts us back where we were before the conjuring act, n'est pas?

Nope.

It will be in different hands being held under different rules.

It's like looting a block of flats and throwing all the goodies out of the windows ... and then reallocating the goodies randomly - or otherwise - to the occupants ... and maybe even non-occupants.

Those who make and enforce The Rules could do well out of this Redistribution Of Wealth.

Indeed. So we need to be concerned about how what's left of the world's wealth is distributed and used, rather than about there being a lot less of it than before we blinked.

That 19trillion is not created magicaly by the banks, its money they owe to their depositors.
If its not paid back, the banks cant give you the money in your savings account or current account.
Because they dont have it.

Someone walks in to Creditstalt in Austria and deposits E100,000
Creditstalt have then lent E90,000 to a Hungarian to buy a house.
The Hungarian now cant afford to pay back the E90,000 and the house, if reposessed and sold will only sell for E50,000.
Creditstalt will then have E60,000 in its vaults, and owe the depositor E100,000.

Back where we were?
If only


In normal times, the Governments depositor protection insurance kicks in, so the government pays the missing E40,000 (the bank closes too)
But the problem is, the Government simply doesnt have E19t, thats 150% of Eurozone GDP, in a good year.
Total debts are supposed to be limited to 40%.

Someone walks in to Creditstalt in Austria and deposits E100,000
Creditstalt have then lent E90,000 to a Hungarian to buy a house.
The Hungarian now cant afford to pay back the E90,000 and the house, if reposessed and sold will only sell for E50,000.
Creditstalt will then have E60,000 in its vaults, and owe the depositor E100,000.

Back where we were?

... the original seller has E90,000 somewhere ... so essentially the money is STILL around, maybe in the form of a Ferrari or cash in a home safe ... but that doesn't help the house owner or the lending bank.

DominicJ wrote:That 19trillion is not created magicaly by the banks, its money they owe to their depositors.
If its not paid back, the banks cant give you the money in your savings account or current account.
Because they dont have it.

Someone walks in to Creditstalt in Austria and deposits E100,000
Creditstalt have then lent E90,000 to a Hungarian to buy a house.
The Hungarian now cant afford to pay back the E90,000 and the house, if reposessed and sold will only sell for E50,000.
Creditstalt will then have E60,000 in its vaults, and owe the depositor E100,000.

Back where we were?
If only


In normal times, the Governments depositor protection insurance kicks in, so the government pays the missing E40,000 (the bank closes too)
But the problem is, the Government simply doesnt have E19t, thats 150% of Eurozone GDP, in a good year.
Total debts are supposed to be limited to 40%.

Whereas in your unregulated free market world, the bank can lend out up to 100% of the deposits they receive and everyone can party harder, yes?

Or would the banks regulate themselves?

Food, I'm beginning to worry about you, you'll be ranting about Bilderburg soon.

We dont live in an unregulated world, your friends the socialists are the ones who have allowed banks to lend 95% of deposits on 125% mortages, they've even promised to pay everyone back with everyone else money if it all goes wrong.

Now be quiet until you have something relevent and factual to say, theres a good chap.

Tied yourself in a knot there.