Chart of the Week: Europe at the Edge

The players change to give the illusion of progress, but Europe's debt problem, actually the western world's debt problem, is still there like the sword of Damocles (or is it Madame Guillotine?) hanging over the heads of the European Union. The EU technocrats have taken over the Greek and Italian governments. Their so-called solution is to leverage Europe even more to buy more debt that governments will have to issue to avoid default. But the debt pile is now toxic to economic growth:

This table in a Bank of International Settlements working paper shows that western nations are in debt beyond what is economically sustainable (Threshold). According to Oliver Sarkozy, the half-brother of France's president, institutional funding has an average 3 year life. Therefore European banks need to raise $800bn each month just to keep current on their borrowing obligations. As Europe slows down under the crushing weight of its debt costs, these debts will become even more onerous. Greece's economy is on emergency life support, and is essentially "brain dead" as one commentator put it. The latest European summit told Greece to sell another €16bn in national assets on top of the €50bn already ordered. Spain's unemployment reached its highest level in 15 years. Portugal's M1 deposits, considered a leading economic indicator, have fallen at an annual rate of 21% over the past six months. Even Germany, on which the fate of the EU rests, is heavily indebted, and the spreads on French debt is widening:

Occupy Wall Street has manifested because the 99% know they are in the grip of an international financial cartel that acts like a bunch of drunken sailors willing to hazard their ships of state if they can keep the plunder coming. Wall Street paid itself $60billion in bonuses between 2008-10 for pumping the stock market up 84% from its 2009 lows. Ms. Merkel is right, the whole shebang hinges on "confidence" as in bunko, facilitated by nanosecond computer algorithms and "voluntary" bond haircuts that do not trigger credit default contracts. Only the millennial guy shivering in his tent gets caught holding the debt bag:

Its widely thought that Italy's pensioners will be the target of EU austerity programmers as they attempt to reduce Italy's €1.9trillion debt, massive youth unemployment, and poor productivity. Clearly, the days of 'bunga-bunga' sonno volati. Is Social Security next?