With $5 Trillion In US And European Funding Needs Over The Next 3 Years, How Long Until The Global Monetization Tsunami Hits (Again)?
While we have presented the below charts in the past in some form or another on various occasions, since everyone's memory is at most 1 trading day strong these days, we are happy to recycle content while continuing to "surprise" our readers. Below, we present the chart showing European maturities over the next three years. It should be sufficient to convince anyone that while the US needs ongoing QE to not only to keep stocks rising past May/June (Fed's 3rd and only mandate) but to monetize trillions in gross debt issuance (without rates needing to surge to make up for demand shortfall as Bill Gross pointed out so well on Wednesday), Europe is in an even worse predicament. Among the Eurozone's banks, there is roughly $2.4 trillion in funding requirements until 2014. And as our disclosure yesterday on the massive Irish capital shortfall notes, nobody has yet answered the question where all this funding will come from, short of the ECB pulling a Fed, and starting to monetize everything from the bottom of the capital structure upward in the primary markets instead of only through secondary market interventions. Keep in mind this excludes actual sovereign funding needs. Which is not to say the US is immune from the same problem. It isn't. But looking at the problem globally confirms everyone's greatest nightmare: where, in the absence of ongoing central bank monetizations (with or without the assistance of major financial black holes like Europe's EFSF), will the world be able to find buyers for roughly $4-5 trillion in debt to keep the self-funded Ponzi going?
European bank funding needs 2011-2014:
And Sovereign debt redemption schedule:
Source: Morgan Stanley
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