European Implosion Sends Panic Through Global Markets As George Soros Warns ‘We May Be Heading For Another Major Financial Crisis’
European Implosion Sends Panic Through Global Markets As George Soros Warns ‘We May Be Heading For Another Major Financial Crisis’ by Michael Snyder – The Economic Collapse Blog
I told you to keep your eyes on Europe. On Tuesday, widespread panic shot through European financial markets and this deeply affected U.S. markets as well. The Dow Jones industrial average fell 391 points, and at this point the Dow and the S&P 500 have been down for three trading sessions in a row. But the big news is what is happening over in Europe. Tuesday’s crash represented the largest one day move for 2 year Italian bonds ever, and Italian bank stocks are now down a whopping 24 percent from their April highs. Overall, European banks have fallen a total of 11 percent over the last four days, and it isn’t just banks in troubled countries such as Italy and Spain that are hurting. The biggest bank in Europe, Deutsche Bank, just keeps on tumbling and is now just barely above all-time lows. A few days ago when I wrote that the next global economic crisis “could be just around the corner”, there were some people that criticized me for making such a statement. Well, as you will see below, now this fact has become so obvious that even George Soros is saying it.
Those that are ignoring what is going on in Italy are making a tragic mistake. Italy is the third largest economy in the eurozone, and even the Wall Street Journal is admitting that its bond market is “in meltdown”…
Risk aversion is back. Italy is the focal point, with its bond market in meltdown, its politics in crisis after President Sergio Mattarella blocked the formation of an antiestablishment government, and its credit rating under threat.
That is all now making bigger waves: Europe’s deepening troubles and disappointing global growth signals are sparking a sudden rally in haven bonds like U.S. Treasurys.
The next financial crisis has already arrived in Europe, and the primary reason for this crisis has to do with the giant mess that Italy’s government has become. The following summary of the current situation comes from CNBC…
Italy has been without a government since an inconclusive vote in early March, with anti-establishment political groups abandoning their efforts to form a coalition over the weekend amid a dispute with the country’s head of state.
President Sergio Mattarella, who was installed by a previous pro-EU government, refused to accept the nomination of euroskeptic candidate Paolo Savona for economy minister on Sunday.
Instead, he set the country on a path to another snap vote by appointing former International Monetary Fund (IMF) official Carlo Cottarelli as interim prime minister.
Of course the Italian parliament will never accept Cottarelli, and it looks like we are heading for snap elections in either July or August.
What is at stake in these elections is of the utmost importance to all of Europe. As Politico recently discussed, if the Italian people continue to move toward anti-establishment parties we could actually see Italy leave the euro or even leave the EU altogether…