Finan¢ial $en$e: U.S. Bank Exposure to Greek Debt

October 3, 2011

U.S. Bank Exposure to Greek Debt

U.S. bank exposure to Greek debt is $43 billion – that’s a lot but certainly manageable, isn’t it? The problem is that U.S. bank exposure isn’t limited to just Greece. It doesn't include exposure to Portugal, Italy, Ireland, Spain, etc... which are all exposed even more to Greece. Contagion. And as I’ve said before, the sovereign debt of Greece right now, which isn’t worth anything absent some other party paying it off, hasn’t been marked to market. It’s still on the balance sheets of all of the banks as if it were 100% good!

Meanwhile, European discontent continues to simmer with labor strikes and social strife. And today, it’s announced that Greece won’t hit it’s economic targets. This can’t be sitting well with the Germans who are already grumbling about the sacrifices that they are going to have to make for a country that just doesn’t seem to want to take any medicine to make themselves better.

As the European Union and International Monetary Fund wrestle with how to address the sovereign mess, the U.S. financial fate in this situation can be synthesized down to one question: Will we see contagion, as we did with our own financial/banking /housing crisis in 2008, starring Fannie Mae, Freddie Mac, AIG, Bear Stearns and Lehman Brothers?

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Disclaimer:

David Keepes aka Dave K. is the writer for this blog titled "Finan¢ial $en$e". He is NOT a registered investment adviser nor does he work in any capacity for an SEC-registered, or any other, investment advisory firm. He writes in an educational capacity and urges and expects anyone who reads his posts and comments to not rely on them for accuracy, and for any reader to perform their own due diligence in regards to all investment and retirement matters. David holds a BA in Economics from the University of Illinois and an MBA from Eastern Illinois University. He is also a permanent Certified Cash Manager since 1995. He lives in Carrollton, Texas, with his wife and one child. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.

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