Debt manageable? Like a pit viper in your pocket.

I just did a quick calculation. I'm sick of hearing how our national debt is manageable (which is obviously false) and that we really need more of it right now (false). A normal rate for the government to pay to borrow money is 6.5%. This is back of the napkin stuff, but kind of compelling. By the end of the year the national debt will be over $14 trillion. Multiply that by the interest rate and you get $910 billion in interest payments per year, or 59% of the entire revenue of the federal government just for interest. How is that manageable again?

That is assuming that people will pretty much still want the debt. If they really are concerned about getting paid back with dollars that are still worth something, it gets out of control fast. Let's just pretend the interest rate was 10%. The interest alone would eat up 90.3% of the entire revenue of the United States government, leaving 9.7% for, say, everything else -- defense, social security, medicare, roads, education, pork, waste and nonsense, etc.

By the way, in case I haven't mentioned it, Keynesian stimulus in a balance sheet recession is idiotic because the money is bound to fall into a deleveraging sinkhole and disappear, yet the problem is still there, only slightly smaller, and consumer confidence doesn’t budge. In other words, people and companies take money they get and stick it in the bank or pay off debt, so it more or less disappears from the economy instead of stimulating the economy!

Good article about lessons from history for the left.

(My thinking is if they had any intention of learning from history, it would be physically impossible to be on the left.)

Why fake it? Will the truth never be known?

Here's a couple of articles where people are exposing government fictions. The first is how the government is allowed to project huge tax increases that people don't react to at all except by paying them. It's too silly an idea to even debunk.

Government pretends people won't react.

Also, here is more detailed information about what I said were fantasy White house projections for the budget for the next ten years. It will be far worse even than they admit. As it turns out, maxing out as many credit cards as you can get your hands on is a bad idea.

Fantasy projections.

Warren Buffett sums it up:

If you don’t know who the “Patsy” is – YOU are the “Patsy”.

Three lines crossed, now cross your fingers

"Peter Bernholz, professor of economics at the University of Basel, Switzerland, in his most recent book, Monetary Regimes and Inflation: History, Economic and Political Relationships, analyzes the 12 largest episodes of hyperinflations – all of which were caused by financing huge public budget deficits through money creation.

His conclusion is that the tipping point for hyperinflation occurs when the government’s deficits exceed 40% of its expenditures. The deficits being run by the Keynesians in Washington are now at that level, well beyond anything ever attempted in U.S. history."

So, there are a few things I want to say about this. Not only have we passed the 40%, we have crossed two other "death spiral" lines. The IMF says that once a country's fiscal deficit is above 90% of its GDP, it doesn't recover (done in 2009). Also, there is the Greenspan-Guidotti Line. Once you pass that line, where you owe foreigners more than you have in reserves (We flew past that line in 2009.), you don't recover.
I also had to include this hilarious graphic. Even the Heritage Foundations line on this chart accepts the ridiculous economic projections for growth. They are based on a gigantic improvement in the economy starting almost immediately and lasting for years without interruption. There's not an economist on the planet who thinks that will happen, not even Obama's boot licker Paul Krugman. Oh, by the way, this doesn't even take into account the looming disaster of socialized healthcare, or costs of fixing the other socialist programs like medicare and social security. Also, as I have pointed out before, based on actual numbers, the deficit this year will be far more that the gigantic $1.5 trillion they claim.

Some more commentary, original article:

“…An unsustainable trend will not be sustained. The national debt will not reach $25 trillion in 2019. Unless the current policies of the Federal Reserve and Obama administration are reversed, the U.S. economic system will collapse well before that. In a recent report, Société Générale, one of France’s biggest banks, noted the possibility for collapse:

"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse. The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Aging populations will make it harder to erode debt through growth. High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt. “

There is no foreign country willing to buy the $13 trillion of debt paying 1% we will need to issue in the next ten years. Obama and Congress are working on another stimulus program, clearly indicating that they are going to continue their efforts to spend the country out of crisis.

Trust in the American financial system and its leaders is dissipating rapidly. At some point in the not-too-distant future, the U.S. Treasury will attempt to sell debt and foreign buyers will boycott the auction. That will mark the point of no return. The unprecedented levels of debt propping up the American Empire cannot withstand higher interest rates. When it collapses under the weight of its massive debt, the dollar will crash and hyperinflation will result. People need to prepare for a future of turmoil and uncertainty. From an investment perspective, gold will retain its value as the dollar falls. Shorting U.S. Treasuries will ultimately prove to be a great investment…”

By James Quinn, March 5, 2010

Fantastic Article about US options to deal with debt

"Just hand the politicians the printing press and go for it."

The following is from an article by Ellen Brown, an author and contributor to www.globalresearch.com. She acts like she's bringing some sanity to the situation, but is actually bringing some insanity. My comments are in green.

"The notion that the federal debt is too large to be repaid and that we are imposing that monster burden on our grandchildren is another red herring. The federal debt has not been paid off since the days of Andrew Jackson, and it does not need to be paid off. It is just rolled over from year to year, providing the “full faith and credit” that alone backs the money supply of the nation. The only real danger posed by a growing federal debt is an exponentially growing interest burden; but so far, that danger has not materialized either. Interest on the federal debt has actually gone down since 2006 -- from $406 billion to $383 billion -- because interest rates have been lowered by the Fed to very low levels.

They can’t be lowered much further, however, so the interest burden will increase if the federal debt continues to grow. But there is a solution to that too. The government can just mandate that the Federal Reserve buy the government’s debt, and that the Fed not sell the bonds to private lenders. The Federal Reserve rebates its profits to the government after deducting its costs, making the money nearly interest-free.

Anyone from the Government Accountability Office on down will tell you that that little detail of interest is a huge deal, and will swallow us whole as we borrow like lunatics and can't really pay the interest now when it's absurdly low. The interest rates required to get people to buy our scary debt are already going up at almost every auction. It is a debt snowball.

All the fear-mongering about the economy collapsing when the Chinese and other investors stop buying our debt is yet another red herring. The Fed can buy the debt itself – as it has been stealthily doing. That is actually a better alternative than selling the debt to foreigners, since it means we really will owe the debt only to ourselves, as Roosevelt was assured by his advisors when he agreed to the deficit approach in the 1930s; and this debt-turned-into-dollars will be nearly interest-free.

This owe it to ourselves argument you hear a lot, and it's idiotic. One, the money to lend to the government has to come from somewhere, so it is taken from some productive use and used for this instead. Two, it still has to be repaid. Three, the government has to pay enough interest for someone to want to lend money. As the debt level goes out of control, the interest rate, and the principal the rate is paid on increases. The alternative is to force you to lend them money without paying you. That takes all that money from productive use, and at any rate, do we want them just taking it?

Better yet would be to either nationalize or abolish the Fed and fund the government directly with Greenbacks as President Lincoln did. What the Fed does the Treasury Department can do, for the cost of administration. There would be no shareholders or bondholders to siphon earnings, which could be recycled into public accounts to fund national, state and local budgets at zero or near-zero interest rates. Eliminating debt service payments would allow state and federal income taxes to be slashed; and the public managers of this money, rather than hiding behind a veil of secrecy, would be opening their books for all to see.

I'm no fan of the Fed and its recent track record, but there was a reason it was established. Without a separate entity, politicians can directly control the printing of money. Could that possibly work out ok? We would literally be relying on the honesty and judgment of politicians to not print money like crazy and kill us with inflation. See the problem? "Nationalized" anything is a disaster. That's why all over the world countries are always denationalizing things.

A final red herring is the threatened bankruptcy of Social Security. Social Security cannot actually go bankrupt, because it is a pay-as-you-go system. Today’s social security taxes pay today’s recipients; and if necessary, the tax can be raised. As Washington economist Dean Baker wrote when President Bush unleashed the campaign to privatize Social Security in 2005:

Social Security went broke this year. It has zero dollars and zero cents. Starting now it takes in less than it pays out. That's why Obama is proposing increasing the age while also increasing the Social Security tax. Duh. Also, when you raise the tax rate, it slows down the economy, so you can't just keep raising the tax. At any rate this ignores the demographic problem that really snuffs out Social Security. There will be far, far too many people collecting benefits relative to the number of workers. Hasn't this stupid author ever heard of that?

“The most recent projections show that the program, with no changes whatsoever, can pay all benefits through the year 2042. Even after 2042, Social Security would always be able to pay a higher benefit (adjusted for inflation) than what current retirees receive, although the payment would only be about 73 percent of scheduled benefits.”

Read the Social Security trustees report. Newsflash! Broke this year! 2042 is a made up, nonsensical number. Do a little homework Ellen. Social Security has zero dollars, zero cents, costs more than it takes in. The year 2042 or 2082 or 2562 has nothing to do with anything.

This is always and forever the problem with socialist programs. They get more and more expensive. Politicians raid the funds. More and more is promised. Actually providing what people paid so much for eventually, after ten or twenty or forty years, becomes impossible. Most countries in Europe have had to continually raise taxes, cut benefits, and import workers for just this reason. Otherwise, their systems would have collapsed many times. Even having done these things, they are mostly headed towards collapse anyway.

What do you think about this?

"...Economic forecasters say future generations of Americans could have a substantially lower standard of living than their predecessors' for the first time in the country's history if the debt is not brought under control.

Government debt, which fuels the risk of inflation, could make everyday Americans' savings worth less. Higher interest rates would make it harder for consumers and businesses to borrow. Wages would remain stagnant and fewer jobs would be created. The government's ability to cut taxes or provide a safety net would also be weakened, economists say.Wages would remain stagnant and fewer jobs would be created. The government's ability to cut taxes or provide a safety net would also be weakened, economists say.

While much attention has been focused on the government's deficit-spending surge during the recession, many economists agree short-term budget overruns -- as ominous as they may seem -- are not particularly problematic.

"What threatens the ship are large, known and growing structural deficits," said Walker, a problem that few politicians seem eager and readily able to fix..."

ABC News Feb. 17

It kind of gives me a warm feeling.

What about this?

Goldman Sachs Wants You to Pay-by-the-Mile to Drive on U.S. Roadways

On January 12, AFP interviewed Mike Robinson, the editor of the UK Column, a liberty-minded newspaper not unlike AMERICAN FREE PRESS.

“Road charging,” as it is called in England, is widespread, he told AFP, as fiber optic cable has been laid along most English roads to help track vehicle travel by the mile so drivers can be charged.

“It has been on the European Union agenda for quite a long time,” he added.

His comments came amid recent news of a radical plan to raise $200 billion by privatizing “the motorway network,” as Brits call it. The plan was presented to the three main political parties by NM Rothschild, the influential investment bank, British news sources say.

The Rothschild bank, called “an architect of several privatizations,” reportedly made its pitch in the weeks running up to the summer recess back on July 21, 2009. Bankers told leading politicians that the sale of the roads overseen by the [public] Highways Agency—all motorways and most “big trunk roads”—could help revive battered public finances. This is the same story Americans have been told…….

And how did U.S. politicians get the idea that privatizing roads was an acceptable future? Two words: Goldman Sachs, according to noted Texas columnist Ed Wallace.

“Yes, large Wall Street investment banks, led by Goldman, started advising states across the nation on how to raise fast money by diverting the most necessary publicly owned assets—roads—into private ownership,” wrote Wallace. “You have to admit, it’s brilliant, because it’s a forced and guaranteed market: Americans can’t get out of driving.”

And as Daniel Schulman and James Ridgeway wrote in a scathing article, “The Highwaymen,” in January 2007, “Many similar deals are now on the horizon, and MIG and Cintra are often part of them. So is Goldman Sachs, the huge Wall Street firm that has played a remarkable role advising states on how to structure privatization deals—even while positioning itself to invest in the toll road market.”

This quick cash will not and is not designed to solve States’ structural financial problems. It enriches Goldman Sachs while forestalling States’ financial day of reckoning.

So, what Goldman Sachs really brings to the table – as evidenced in the example above - is sophisticated financial products for HUGE fees or profits to Goldman Sachs, which cause their clients to undertake big financial risk which likely weaken [think tapeworm] their clients’ financial position over time. Rob Kirby

Does anyone think this won't happen, even though our tax dollars already paid for those roads? At least it enriches Goldman Sachs. Based on the amount of loving attention given to this task by our president, that must be important.

Or this...

The price of freedom of religion, or of speech, or of the press, is that we must put up with a good deal of rubbish.
Robert Jackson

Great article about the current global crisis

I love rainbows and lollipops!

A great article about the current crisis and where it's headed: www.marketoracle.co.uk/Article16954.html

He's very caustic and uses a pretty fair amount of economic jargon, but still excellent. He cracks me up with talk of "public serpents" and even once says 'illuminati." I'm not sure he meant that literally.

Tell me, if the $787 billion stimulus was almost literally life or death last year, why didn't they spend it??? They told us the sky would fall, cats and dogs would sleep together, hail the size of Volkswagens would fall on every house, people would burst into flames, etc. So why didn't they spend it? Every other country spent theirs quickly. Two thirds of our official, recognized stimulus is still just sitting there (as opposed to $11 TRILLION of sneaky, back-door stimulus).

And if $500,000,000,000 is still just sitting there, why do they now need to pass another stimulus? I really don't know. The words "slush fund for their buddies" comes to mind, but I don't really know. That's worrisome. I normally know every move they make. How can the purpose of so much money be so unknown?

More evidence about my predictions, sarcasm

Three more articles by three more authors supporting my economic predictions for 2010:

www.marketoracle.co.uk/Article16929.html Financial system saved?

www.marketoracle.co.uk/Article16927.html US debt crisis

www.marketoracle.co.uk/Article16922.html Future of the dollar, excellent summary of major events showing it's in trouble.

Below is a link to a great article about how 34 states are moving to block implementation of any socialized medicine scheme.

www.newsmax.com/US/US-Health-Overhaul-States/2010/02/01/id/348526

I have a new money-making scheme. I just need a little help finding the right place to implement it. I need to know the location of the 440 imaginary congressional districts that got to split $8 billion of the stimulus bill. They even had jobs created despite being imaginary! Being imaginary, there shouldn't be anyone living there now, so if I move my family to one of those districts I should get all of the jobs created there plus all of the millions of dollars spent on that district. Right? There shouldn't be competition there. I'm sure of it. Please help.

We got the announcement today that the world record $3.8 TRILLION budget will produce the largest deficit in the history of the world.. Luckily, though, our dear leader told us that A.) it's Bush's fault that he has quadrupled Bush's deficits and B.) this budget really represents getting back to fiscal responsibility. Whew! For a second I thought it was an insane spending spree that will hurt us for the next 50 years. By the way, the projections showing the record deficit being "only" $1.6 Trillion this year are so absurdly optimistic they make me giggle. Just according to the previous optimistic estimate above (tax receipts are still falling fast, not rising), the difference between taking in $1.6 trillion and spending $3.8 trillion would be $2.2 trillion just for this year. That is about $7,000 per man, woman and child. Another way to think of it is 2,200 thousand millions.

Confidence is the thread the economy hangs on

From This Time is Different, an economics book studying 250 economic crises in 65 countries:

"But highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive forever, particularly if leverage continues to grow unchecked."

"If there is one common theme to the vast range of crises we consider in this book, it is that excessive debt accumulation, whether it be by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom. Infusions of cash can make a government look like it is providing greater growth to its economy than it really is. Private sector borrowing binges can inflate housing and stock prices far beyond their long-run sustainable levels, and make banks seem more stable and profitable than they really are. Such large-scale debt buildups pose risks because they make an economy vulnerable to crises ofconfidence, particularly when debt is short term and needs to be constantly refinanced. Debt-fueled booms all too often provide false affirmation of a government's policies, a financial institution's ability to make outsized profits, or a country's standard of living. Most of these booms end badly. Of course, debt instruments are crucial to all economies, ancient and modern, but balancing the risk and opportunities of debt is always a challenge, a challenge policy makers, investors, and ordinary citizens must never forget."

"Perhaps more than anything else, failure to recognize the precariousness and fickleness ofconfidence-especially in cases in which large short-term debts need to be rolled over continuously-is the key factor that gives rise to the this-time-is-different syndrome. Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang!-confidence collapses, lenders disappear, and a crisis hits.

"Economic theory tells us that it is precisely the fickle nature of confidence, including its dependence on the public's expectation of future events, that makes it so difficult to predict the timing of debt crises.

Look at this gap, as US tax receipts plunge and spending skyrockets out of control. The continued functioning of the economy rests entirely on confidence. The actual numbers and what is happening is horrible and getting worse. The only thing propping things up at all is confidence. That is why the administration is creating the numbers out of thin air. Economists and experts don't believe them, and prove that they are nonsense. Those numbers are so that the average person can feel good and not run for the hills. Check out what this analyst had to say about the latest GDP numbers (which are silly - how can the economy surge forward when the total number of hours worked in the US is going down, unemployment keeps rising, and tax receipts keep falling?):

"Smoke and mirrors" is a common theme directed at the officials who are either woefully ignorant or blatantly lying about the worth of their existing "solutions" to the problems they face. There's a deep underlying suspicion of mainstream media cheerleading. The perception of the informed public is that the government's numbers are about as reliable as quoting the tooth fairy.

Charts like this one aren't fooling anyone (I've helpfully added some extra text as to my opinion

of the latest optimistic numbers)...

The reason this kind of projection has no real credibility is because things continue to go from bad to worse in the real world. Economic pain and suffering increases by the day and I haven't read anyone outside the establishment cheerleaders who thinks things are getting better."

It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world. Thomas Jefferson

Broke, but not broken

Sometimes it's good to step way, way back and look at what's going on. In this case, let's zoom up to 30,000 feet and take a look at our economy. We keep hearing about all the recovery -- sure foreclosures, bankruptcies, and layoffs are skyrocketing, but nothing's perfect.

If individuals are still clearly suffering, who is leading this recovery, and with what resources? Banks are broke. Hundreds will likely go bankrupt this year. Most are engaging in "extend and pretend" by constantly postponing the day the have to admit many of their loans are in default.

For that matter, FDIC is broke. They are on the hook for up to $5.1 TRILLION. Ask me how much money they have set aside for that. Go ahead and ask me... Close to zero.

Businesses are broke. Tax receipts from businesses are down more than 90%.

The Treasury is broke. Remember this chart that shows tax receipts more or less steady, but spending exploding?

Social Security is far beyond broke. So is Medicare.

The Fed is essentially broke. They only have 6% reserves and hundreds of billions of dollars of toxic assets. If the toxic assets are worth 7% less than they are supposed to be worth, the Fed is upside down. Do you suppose toxic assets are worth at least 7% less than they were originally supposed to be?

Our government is printing money to loan itself money. I ask again, who is leading the "recovery" and with what resources? Printing presses and stacks of paper?

We don't want your debt!

Above is a nice chart showing what I have talked about in previous posts about lack of foreign demand for US debt (unwillingness to loan us money). Even this chart looks a lot better than reality. In reality, this little bit of "demand" is where the Fed is paying foreigners in full for their worthless Fanni Mae and Freddie Mac holdings. Then they are supposed to use the money to buy our debt, which is better than the garbage they were holding.

Real demand is less than zero right now -- net selling.

To recap, the US government needs to borrow far, far, far more money than any government in history has ever tried to borrow in a year. US citizens want to lend a tiny bit; foreigners want to lend none. So that leaves the other 90% to sell. A lot of records for demand will have to be completely shattered to keep the federal government and economy going until summer. Have a good day!

The Chinese just can't stop themselves...

If I see one more expert say that China has to continue to loan the US government money because otherwise the results are bad for them, I'll scream. That is ridiculous logic. It's like saying the Titanic couldn't sink because it didn't have enough lifeboats. Let's put this stupidity to bed once and for all.

First, the Chinese have nearly stopped lending us money. Second, they've warned us that they are not lending more. Third, they've warned us many times that the course we're on is "reckless," irresponsible." and "endangering the world economy." So, they don't think much of Obama's and Bernanke's plans. So the idea that they can't stop is silly, since they already pretty much have.

Also, think about this scenario. You have loaned your friend a bunch of money. He keeps asking for more. You are getting increasingly concerned about his ability to pay you back. He knows you're worried so he says, "Just loan me another $5,000 and I'll get you paid back in full next week." The next week he asks for more, and the next week asks you for more. Do you continue to loan him money in the hope of getting all of it back someday, or is there a point at which you might stop?

Of course there is a point at which you would stop. That is the point at which you decide that no matter how much you lend, it won't help and you won't get your money back. On the day you're sure that more won't help, you'll stop. It's that simple. The Chinese aren't the Red Cross giving emergency humanitarian aid. They are hoping to come out ahead. When hope of that is gone, they'll stop. And they virtually have.

Our biggest problem - get out your wallet

Pie chart is for background information about who holds our debt.

Very simply, here is a basic and irreducible problem. In 2010 the United States government will need to borrow $2,500,000,000,000. Note that this number doesn't even include the recent debt of $3 TRILLION that expires and needs to be re-sold this year, for a total of over $5 Trillion. There are three sources of money for that.

One is people and companies inside the United States. Last year they loaned the government $200 billion, or about 8% of what will be needed for the new debt this year.

The second source is people outside the U.S., who sold nearly as much as they bought in 2009, and in the second half of the year were net sellers: They were very unwilling to loan more, especially short-term debt, which is most of what will be needed in 2010. Several major lenders have publicly stated that they are not planning to lend more, and that the U.S. is being "reckless," "irresponsible," and "endangering the world economy." Hardly a way to get people to loan you money.

The third source is printing money, which is where a large part of the money came from in 2009. This is essentially a parlor trick of your left hand borrowing from your right hand. It is not a serious strategy one can do for long. It's like moving money from your wallet to your bank account and back again. Ridiculous.

So, if foreigners won't lend, and printing money heads us towards what they call the "death spiral" (and the Fed claims they won't do it much longer), that leaves people within the U.S. What do you think the chances are that people here will suddenly, starting January 1, start lending TWELVE TIMES as much to our government to make this come out ok? As they say, slim or none, and slim is out of town.

A failure to borrow enough money to run our government means either much higher interest rates paid and a plunge into depression, or bond auction failure, which means game over. Hmmm.

Can more debt fix too much debt? World outlook

This guy has said this better than I could, so I'll let him say it. He is a UK finance expert who writes a blog.

“The world economy is being kept alive by the constant infusion of massive doses liquidity by the central banks at abnormally low costs alongwith stimulus packages aimed at revival of certain selective industries like housing, auto etc. The effects of these are being seen in the form of huge fiscal deficits in most of the countries or drawdown on reserves in some countries like China. The effects of these actions on Governments, Banks, Businesses and Consumers are discussed below and an attempt is made to outline the future path of the world economy.

The Governments around the world this year have given unprecedented stimulus packages to try to stabilize their economies and capital markets from the effects of bursting of the Biggest Credit Bubble worldwide in 2008. Their main aim appears to be postponing the effects of the same without initiating any cure for the root cause of the problem i.e. excessive debt and leverage which led the whole world to the brink of failure of the financial markets. They are experimenting with the idea that a problem of excessive debt in comparison to the earning potential of a household / business / government can be solved by taking up more debt and leverage…

The costs of maintaining and running the governments have gone up substantially worldwide due to their increase in size and the tax revenue collections have fallen sharply due to the recession or deflation in the asset prices. This has resulted in a loop whereby the government has to increase its borrowing or money printing in order to sustain itself or in other words living beyond its means to a great extent something that the consumers were doing for last so many years. The government has picked up the baton of living the life of financial irresponsibility from the consumers which had landed them in such a mess in the first place…

The world governments are basically running a Ponzi Scheme whereby they take up new debt and pay back the old debt with it, something that Madoff did but on a much larger scale. As long as they are able to raise new debt or get investors to invest in their sovereign bonds things will keep on rolling, the moment the ability to raise new debt goes below the amount of old debt and the interest on the same, a domino effect of defaults gets unleashed.

Problems of countries like Dubai, Greece, Iceland, Ireland and some other countries in the Baltic states are now very much discussed in the media. There are other countries in queue who are living way beyond their means like Ukraine, Venezuela, Argentina, Spain, U.K., Japan to name a few. The problem is that if one country defaults on its debt it triggers off a chain of defaults across the world sending ripple waves all around the financial markets and currencies because of the linkages in global finances. The problems so far have been contained but its only a question of time when a default occurs, which is unavoidable and all hell will break loose...”

Akhil Khanna

I could add about ten more countries to this list, mainly in Europe. Many are teetering on the brink.