Facts about banks

…the total liabilities of
Deutsche Bank (leverage ratio over 50!) amount to around 2,000 billion
euro, (more than Fannie Mai) or over 80 % of the GDP of Germany. This
is simply too much for the Bundesbank or even the German state to
contemplate, given that the German budget is bound by the rules of the
Stability pact and the German government cannot order (unlike the US
Treasury) its central bank to issue more currency. The total
liabilities of Barclays of around 1,300 billion pounds (leverage ratio
over 60!) surpasses Britain’s GDP. Fortis bank, which has been in the
news recently, has a leverage ratio of "only" 33, but its liabilities
are several times larger than the GDP of its home country (Belgium).

The Fed has possibly been bailing them out too (not necessarily by intention), as it is likely that some of these institutions had heavy exposure to the weaker U.S. institutions.  Here is the link.  Those failures should also put the U.S. regulatory failures in perspective.  And what would happen if a big U.K. bank were on the verge of failing?  Would the Fed have to step in there too?  Contagion is contagion, as Aristotle once said…


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