Euro Collapse?

This current news reminds me of an old Paul McCartney song. "The Pound is Sinking." Now it is the Euro:

As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.

But it gets worse:

Recent Foreign and Commonwealth Office instructions to embassies and consulates request contingency planning for extreme scenarios including rioting and social unrest.

Greece has seen several outbreaks of civil disorder as its government struggles with its huge debts. British officials think similar scenes cannot be ruled out in other nations if the euro collapses.

Why is this happening? 

The balance sheets of European banks are piled high with legacy assets -- mortgages, real-estate, and other loans--that are tying up precious capital and constricting the banks' ability to make new, more productive loans.

At the same time, the banks' traditional sources of funding--other banks and institutional investors--have begun drying up as the European crisis intensifies.

This leaves the banks desperately needing to raise cash to survive.

The first plan was to sell off the crap assets.

The Banks are surprised when no one wants the "crap assets" at a price that will keep the banks solvent. 

How many banks are at risk? No one knows. Here is a list of european banks that are probably already bankrupt. 

20 - Royal Bank of Scotland Group (UK)

• PIIGS Exposure as % of Common Equity: 175%

19 - Landesbank Berlin (Germany)

• PIIGS Exposure as % of Common Equity: 179%

18 - Barclays (UK)

• PIIGS Exposure as % of Common Equity: 189%

17 - Landesbank Baden-Württemberg (Germany)

• PIIGS Exposure as % of Common Equity: 230%

16 - DZ Bank (Germany)

PIIGS Exposure as % of Common Equity: 239%

15 - KBC Bank (Belgium)

• PIIGS Exposure as % of Equity: 247%

14 - Credit Agricole (France)

• PIIGS Exposure as % of Common Equity: 293%

13 - Deutsche Bank (Germany)

• PIIGS Exposure as % of Common Equity: 327%

12 - BNP Paribas (France)

• PIIGS Exposure as % of Common Equity: 358%

11 - Commerzbank (Germany)

• PIIGS Exposure as % of Common Equity: 462%

10 - Dexia (Belgium)

• PIIGS Exposure as % of Common Equity: 552%

9 - Banco Santander (Spain)

• PIIGS Exposure as % of Common Equity: 953%

8 - Unicredit (Italy)

• PIIGS Exposure as % of Common Equity: 1,070%

7 - Bank of Ireland (Ireland)

• PIIGS Exposure as % of Common Equity: 1,385%

6 - BBVA (Spain)

• PIIGS Exposure as % of Common Equity: 1,566%

5 - EFG Eurobank Ergasias (Greece)

• PIIGS Exposure as % of Common Equity: 1,601%

4 - Intesa Sanpaolo Group (Italy)

• PIIGS Exposure as % of Common Equity: 1,638%

3 - Banco Popular Español (Spain)

• PIIGS Exposure as % of Common Equity: 1,927%

2 - Banca MPS (Italy)

• PIIGS Exposure as % of Common Equity: 4,666%

1 - Allied Irish Banks (Ireland)

 PIIGS Exposure as % of Common Equity: 33,352 

What these figures mean is that it will not take much of a "haircut" to bankrupt many European banks. No doubt the countries in which these banks are doing business will make sure that they will stay afloat. Oh, wait, these countries are basket cases too.