European Banks' Exposure to PIGS Exceeds $2 Trillion

Wondering why all the hysteria from London and allied European financial circles to force nations such as Spain and Greece to kill their populations off through fascist austerity, in order to "balance their budgets"—i.e., pay their debts?

Statistics just published by the Bank for International Settlements (BIS), and reported widely throughout the world's financial media, reveal that European banks have an exposure of a whopping $2.1 trillion dollars in the so-called PIGS nations (Portugal, Ireland, Greece and Spain). Of that, nominally German banks are out on a limb for about $540 billion (26% of the total), French banks for $370 billion (18%), and British banks for $350 billion (17%).

And among the PIGS, Greece is the least of it—as Lyndon LaRouche has insisted all along. They owe "only" $253 billion of the PIGS's $2.1 trillion in public and private debt. The lion's share —over 40%—is owed by bankrupt Spain.

"The exposure is enormous," Societe General economist Klaus Baader told Bloomberg nervously. "The crisis in Greece is...a concrete problem for Europe's whole banking sector. That explains the interest of finance ministers in stabilizing the situation."

But that $2.1 trillion is actually chump change, compared to the derivatives bubble built on top of it, which is larger by at least an order of magnitude. The real concern is that "Greece's economic woes will 'spook' the derivatives market because of concern the nation's banks may struggle to honor their credit-default swap trades," Bloomberg reported. "Banks' exposure could relate to a mix of sovereign, corporate and bank risks, and may have been hedged," they admit.

London mouthpiece Ambrose Evans-Pritchard also referred to this elephant sitting in the middle of the room: The BIS calculation on bank exposures "understates cross-border links. There are large loans between vulnerable states. The exposure of Portuguese banks to Spain and Ireland equals 19% of Portugal's GDP. Interlocking claims within the eurozone zone are complex. Contagion can spread fast."

To which Lyndon LaRouche commented: "He's got that right."