Citigroup (NYSE:C), Bank of America (NYSE:BAC),JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Morgan Stanley’s (NYSE:MS) Exposure to European Crisis

It hasn’t taken more than few days after the announcement that the European Union would be bailing out the socialist, welfare states of the region, when it is being increasingly realized that this is another way of saying we’re bailing out the banks again, including the largest ones from America – Citigroup (NYSE:C), Bank of America (NYSE:BAC),JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), which have significant exposure in the EU.

The Federal Reserve is again out in force attempting to play down the fact that Americans are going to have to be part of bailing out these countries which refuse to change their socialist ways, and have built their welfare states to the point of being unsustainable, but hid how deeply they were in debt in order to put off what we’re seeing emerge today, which is the propping up of wages and perks from the radical unions in the countries to the degree they aren’t sustainable.

As former British Prime Minister Margaret Thatcher said in the past, the problem with socialism is you eventually run out of other people’s money. That’s exactly what’s happening in Europe today, and the bailout, once you start following the money, will end up benefiting the giant banks around the world who were the enablers of this fiasco.

The Federal Reserve is spinning it this way: this isn’t bailout of these socialists (they don’t use that term) but a move to protect the banks who are exposed to the sovereign debt crisis in Europe which is highly likely to go viral, or as they’re describing it – become a contagion.

For the large banks in the U.S., their exposure is to countries which could bring a lot of damage to them, as their economies are larger than Greece or Portugal, which are probably going to be the first to fall. That means the risk is from Italy, Ireland and Spain.

The five banks mentioned above have exposure to those three countries to the tune of close to “25% of the banks’ combined Tier 1 common capital.”

But that’s not even the major risk, as dangerous as it is. The greater risk is if this extends to Germany and France, where the debt exposure to American banks, when adding up everything from government, banks, and others, comes to an extraordinary 61 percent of combined Tier 1 common capital.

Exposure to German banks is even higher than their exposure to the government.

Why are they revealing all of this and attempting to spin all of this as not a bailout of these countries who have been grossly irresponsible – at minimum – with their spending? It sounds like they’re communicating that they’re now not going to allow the banks to fail in relationship to the sovereign debt crisis, and hints that $1 trillion may not be enough to rescue the region, means they’re preparing a plan which may far exceed even the approximate $ trillion now offered.

In other words, if they bailed out American banks using hundreds of billions, how much are they going to use to bail out these banks that are exposed all around the world to the default of possibly up to five nations? It’s staggering to even think of, but the language of the Federal Reserve seems to imply they’re ready and willing to do whatever it takes to make it happen.

When you consider how that has already hammered the markets just from the $1 trillion offered, what will happen if and when it skyrockets from there?

These central banks, including the Federal Reserve, are drunk on spending, and are so narrowly focused on bailing out out everything that has risk associated with it, that they will more than likely bring down the global economy in their unprecedented, but misguided efforts.

This is because they’ve adapted the economic theory of Keynesianism, which at its basic core means the endless spending of money by governments and central banks is the key to economic prosperity. The crises we’ve been facing, and this new crisis, show that faith in Keynesianism needs to be re-examined.

The other thing emerging from all of this is faith in socialism needs to be finally put to death, as there’s a limit to how much money you can steal from the productive and give to the unproductive. It’s simply not sustainable, and the alleged do-gooder better be reined in before they destroy the world economically from their faulty ideologies and tortuous logic that everything has to be “fair” in the world, although fair can’t even be defined.

This is where all of this has brought us, and now the governments and central banks are going to attempt to bail out their banking cartel friends once again at the expense of their citizens.

Just like the countries who spent themselves to this place, the big banks who made decisions to take on the debt to allow it to happen, shouldn’t be bailed out and they need to suffer the consequences of their decisions or they’ll never take measures to manage their businesses in ways that would prevent this from happening again.