From Safe Haven….

But European banks may be in far worse shape. Bruno Waterfield of the London Daily Telegraph reports to have seen an eyes-only document prepared by the European Commission for the finance ministers of the various EU member countries. The problem revealed in the report is an estimated write-down by European banks in the range of 16 trillion pounds, or about $25 trillion dollars! The concern is that bailing out the various national banks for such an unbelievable amount would push the cost of government borrowing to much higher levels than we see today.

From the Telegraph (Bold Tags added to highlight the shocker)….

The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan – and Turkey next – and is fast exhausting its own $200bn (€155bn) reserve. We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights.

Its $16bn rescue of Ukraine has unravelled. The country – facing a 12pc contraction in GDP after the collapse of steel prices – is hurtling towards default, leaving Unicredit, Raffeisen and ING in the lurch. Pakistan wants another $7.6bn. Latvia’s central bank governor has declared his economy “clinically dead” after it shrank 10.5pc in the fourth quarter. Protesters have smashed the treasury and stormed parliament.

Based on my dim understanding of what the special drawing rights are, I don’t think it is fair to characterize them as giving the IMF the ability to print money. But I am hardly an expert on the IMF so what do I know?

For what it is worth, here is the IMF description of Special Drawing Rights and here is the the IMF description of its lending constraints.

From R-Squared…..

It’s been taking place slowly, week after week, but low gas prices have brought gasoline demand back up. There has been anecdotal evidence that suggested demand might be heading higher, such as recovering sales of gas guzzling cars. But for watchers of This Week in Petroleum, the data confirm the anecdotes: Gasoline demand has recovered to the point that it is now higher in the U.S. than it was a year ago. This week’s Summary of Weekly Petroleum Data (off of which This Week in Petroleum is based) shows that the 4-week rolling average has for the first time in recent memory increased above (albeit slightly) the level of a year ago.

Granted, gas prices have fallen a lot. But for gas demand to have risen above where it was at last year shows that America can’t be that badly off yet.

From Felix Salmon….

If the government’s stress test is anything like Creditsights’s stress test, then Wells Fargo will need another $119 billion; BofA, $99 billion; JPMorgan, $124 billion; Citi, $101 billion; Goldman Sachs, $47 billion; and Morgan Stanley, $34 billion. That’s over half a trillion dollars right there, for those of you counting along at home.

From the Telegraph….

More than three million people are having to help their parents financially as the savings crisis engulfs a generation of Britons, research has revealed.

A Daily Telegraph survey – the first of its kind since the recession began – highlights the heavy toll being taken on Britain’s so-called “Babygloomers”.

Almost one in ten adults are having to contribute to their parents’ upkeep, the research found. The Norwich Union research suggests more than 1.3 million adults aged between 17 and 65 are paying their parents more than £250 each month, with some paying up to £1,000.

Many pensioners have found themselves struggling as their income from savings has virtually disappeared following the drop in interest rates. As a result, they have been forced to turn to their children for help.

If the UK is anything like America, I would bet that there are more parents helping their adult kids than there are kids helping their parents.

Still, this demonstrates the costs of trying to lower interest rates in order to stimulate the economy. This is one of the reasons why lowering the interest rates can actually increase the savings rate as I explained in this post.