HELP! Europe Cannot Service Its Foreign Debt

The UK? has? $4.36 for each $1.00 of GDP. It owes hundreds of billions to Germany and Spain? while its banks are on the hook to Ireland, Italy and Portugal.

Spain owes $2.84 for every $1.00 of GDP? including large amounts to Germany and France.? France comes close to Spain with $2.25 of debt for every $1.00 of GDP.? Germany has $1.76 of debt for each $1.00 of GDP.

So, if the IMF needs $794 billion to bail out Italy? which has only? $1.63 of debt for each dollar of GDP? it suggests the cost of stabilizing all Europe is going to be quite a few trillions.

By comparison, the U.S. looks in quite a lot less trouble, since our foreign debt is $1.01 to every $1.00 of debt? with the largest amount held by China and Japan .

Of course, Italy?s need for a transfusion ism made immediately necessary by a borrowing rate of over 7.00%. Spain and France have the next highest borrowing costs. Germany only need pay some slight amount over 2.00% to borrow 10 year money.

The quandry for Europe is the combination of sovereign debt and bank debt, which in some cases is to be able to lend to the sovereign nations.

Imagine if the dollar was in danger of collapsing. Well, that?s apparently what?s going on with the euro. Too damned murky to call.

?

Ten Year Sovereign Borrowing Rate

U.S? ? ? ? ? ? ? ? ? 1.86%

U.K???????????????? 2.14%

France??????????? 3.67%

Germany???????? 2.05%

Italy??????? ? ? ? ? 7.29%

Spain?????????????? 6.59%

Source: http://www.forbes.com/sites/robertlenzner/2011/11/27/help-europe-cannot-service-its-foreign-debt/?feed=rss_home

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