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Contagion coming to America?

The Wall Street Journal has a small article today entitled "German Banks Feel Strains," which includes the attached chart (about the same size as the article).  

The concise, but powerful article is about the funding and credit quality concerns of the German and French banks and the chart shows the inter-connectedness and exposure of those banks to the debt of Italy, Spain, Greece, Portugal and Ireland.  But, the chart understates the size of the problem because it only includes sovereign debt.  For example, it shows that German banks have $14 billion sovereign exposure to Greece, but the article states "German banks have a reported exposure to Greece's government, companies and citizens of $23.8 billion, according to the Bank for International Settlements."  Given the brutal austerity program being put into place in Greece and the coming years of slow, no or negative growth, it's virtually a certainty that Greek companies and citizens aren't going to be fully paying all their creditors in the coming years.  The same is true for the French banks and all other creditors. 

But, even including all that understates the problem.  The complete picture would require another chart showing the exposure of US, UK and other banks not only to the sovereign, business, and citizen debt of Italy, Spain, Greece, Portugal and Ireland, but also the exposure to all of that debt from the German and French banks.

The title of that chart would be called "Contagion comes to America." 

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