Over the last several days, Europe’s crisis has deepened dramatically. The euro currency union has been coming apart at the seams … and the region’s banks are teetering on the verge of complete collapse!
Just take a look:
In Greece, the latest parliamentary elections ushered in a wave of anti-austerity candidates. They’re threatening to tear up agreements with richer euro-zone members that took several months to negotiate, and that formed the basis of the country’s $307 billion bailout.
German officials are strongly hinting that this could be the straw that breaks the camel’s back — meaning Greece could become the first country to be officially booted out of the euro!
Already, the country’s citizens have been stampeding to their local banks to pull out deposits as fast as possible — nearly 6.4 BILLION dollars in the past several days alone — with snaking lines at ATMs from Athens to Thessaloniki!
And that’s likely just the beginning … because I’ve seen estimates that peg the cost of an all-out Greek exit from the euro at hundreds of billions of dollars — spread throughout the European financial system!
Meanwhile, Greece Is Just the Epicenter of
This Impending Crash in European Banks …
In Spain, the government was just forced to commit ANOTHER $6 billion in bailout money to save one of its major banks from collapse.
There’s just one problem: Spain ITSELF doesn’t have the money to fund these bailouts!
Investors know this, and that’s why they’re dumping Spanish bonds like mad. The cost of financing the government for the next 10 years just surged above 6.3%, rapidly approaching the panic highs set in the fall of 2011. And the cost of Spanish default insurance also just hit an all-time record!
Translation: Even without the ripples from Greece, Spanish banks will probably drop like rocks!
Then there’s Italy, where Moody’s Investors Service just took the axe to its ratings on 26 major banks.
The cuts ranged from one notch to four notches, and in a classic case of understatement, the firm’s outlook on those banks remained “negative.”
If this sad, sorry process looks eerily similar to you, it should …
This is precisely the kind of “snowball rolling downhill” financial crisis we saw in the U.S. during the housing and mortgage crisis of 2007-2009!
That banking and financial crisis ultimately crushed global stock markets, and led to the failure or bailout of banks and brokers around the world.
Many investors lost fortunes.
And make no mistake — I think the same thing is going to happen this time around. In fact, I believe spillover from the European crisis will quickly come rolling back onto our shores, too.
Trade safe until then
Erik
