Friday, May 18, 2012
Europe is a Dead Man Walking
By Reginald Kaigler (DEMCAD)
It's May 18th, 2012. In the last week, Moody's downgraded 16 Spanish bank. The top bank (Santander) and the number two bank (BBVA) dropped by three notches. This is happening in a country with a 24.4% unemployment rate. This 47 million person country has 5.64 million unemployment workers.
Now Greece is facing a new round of elections and there's serious talk of Greece leaving the European Union. Remember, I've been expecting at least two or more countries to exit the union this year. Frankly, I'm surprised it's lasted this long.
Don't expect things to get better any time soon. Germany's finance minister Wolfgang Schaeuble was very frank with France's Europe 1 radio.
"Regarding the crisis of confidence in the euro ... in 12 to 24 months we will see a calming of the financial markets," he warned.
Zerohedge is reporting that Portugal and Ireland are back in the credit red zone. If the banks can't cover loan loses, business activity will froze and the entire economies would suffer.
The reason why I'm concerned about Europe is because their finances are intertwined with America's credit system. Essentially, if people lose confidence in the system, it's weaknesses with no longer be ignored. Ultimately, I don't see this system surviving for much longer. Not on either side of the pond.
German Minister warns
Moody downgrades 16 Spanish Banks
Spanish unemployment hits record 5.64 million