The dire state of euro-area bank and sovereign credit

• How much debt are euro-area financial institutions carrying?
• Economic stagnation looms
• Bob Lyddon explains the challenges the euro area faces to survive

Bob Lyddon is a leading expert on both the public and private aspects of the euro-area financial system. In a recent report, published earlier this year, he attempts to calculate just how much debt and leverage euro-area financial institutions are actually carrying.

He also looks at the state of sovereign finances and finds their debts are hugely undercounted as a result of various accounting complexities that are unique to the euro area. An honest assessment taking everything into account would place the euro area’s debt-to-GDP ratio much higher than official figures.

The risk to the euro area is one of fragility on the one hand and possible fossilisation on the other. Credit is no longer flowing naturally through the economy but in ways that are heavily distorted and don’t support growth.

An economic stagnation looms, one that might, through political pressures, eventually bring down the entire single currency project. Watch the interview to hear Bob explain just how serious the issues are and the challenges the euro area faces just to survive in its current form.

Click here or on the image below to watch the video.

John Butler
Editor, Fortune & Freedom