This is a follow-on to my blog entry of September 28th entitled "World Economy on Crutches" in which I said, "The world's economic situation is dire and the disease-ridden Goliath is about to collapse as the crutches of the last decade will no longer hold the weight of total global debt.  The central banks of various nations and the so-called European Union have had the money presses working around the clock while whistling in the dark and hoping against hope that the collapse will not happen soon, or at least not on their watch."

For background, on October 1st economist Michael Hudson wrote about James Galbraith's "Welcome to the Poisoned Chalice" This is a suggested read for all those who want to understand what has taken place in Europe as the EU/Euro took hold and began to strangle economies while funnelling billions to the banks through countries like Greece whose citizen have to pay the debt. Use the article as a kind of McGuffey's reader on the topic. Excerpt: "The essays in this book present Greece’s experience as an object lesson for other countries seeking to free themselves from right-wing financial control. The IMF and ECB do not even consider their destruction of Greece’s economy to be a failure. They continue to impose an austerity doctrine that was shown to be fallacious already in the 1920s."

Hudson goes on to explain: "The euro’s creation can best be viewed as a legalistic coup d’état to replace national parliaments with a coterie of financial managers acting on behalf of creditors, drawn largely from the ranks of investment bankers. Tax policy, regulatory and pension policies are assigned to these unelected central planners. Empowered to override sovereign self-determination and national referendums on economic and social policy, their policy prescription is to impose austerity and force privatization selloffs that are basically foreclosures on indebted economies. Galbraith rightly calls this financial colonialism."

Just reading this article will make you want to tear your hair out.  But as Hudson says, "Debts that cannot be paid, will not be paid".  That is when the fun begins.

And as Greece serves as a poster child for the monumentally failed policy called austerity, Germany's Deutsche Bank is winning the race to be the poster child for this round of bank failures since all those smarty pants bankers have not got the end game figured out.  Deutsche Bank is in grave trouble again, having been massively bailed out during the last crisis, and may be the Lehman Brothers of the Euro Zone, precipitating the collapse of the European economy with its inevitable, worldwide domino effect. 

Pam and Russ Martens wrote on October 3rd in Wall Street On Parade, "Just how speculative is Deutsche Bank after the U.S. helped to prop it up during the 2008 financial crash? Prior to the opening bell at the New York Stock Exchange this morning, the bank is showing a stock market capitalization of $18.05 billion with the following exposure to derivatives according to its 2015 annual report: 'At December 31, 2015, the notional related to the positive and negative replacement values of derivatives and off balance sheet commitments were € 255 billion, € 606 billion and € 31 billion respectively.' That gives a whole new meaning to speculation, even by the wild west standards of U.S. banking." 

That's $1 trillion folks.  How much longer do you think this will hold up?  It is now 5 a.m.

Here we go round the prickly pear
Prickly pear prickly pear
Here we go round the prickly pear
At five o'clock in the morning.  T. S. Eliot