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European Mess Deepens As Economy Slumps, Bank Capital Hole Grows!

 May 25, 2012 03:40 PM

(By Mike) Fire and brimstone are raining down on the European economy and the European banking system.

That's not just my opinion. That's the word coming from the world's top economic forecasters, credit ratings agencies, and industry trade groups!

Just get a load of the latest outlook from the OECD, the Organization for Economic Cooperation and Development. The supranational group releases a twice-yearly report on the global economy, and the one out this week warned that …

"The risk is increasing of a vicious circle, involving high and rising sovereign indebtedness, weak banking system, excessive fiscal consolidation and lower growth" and that it would "spill over outside the euro area with very serious consequences for the global economy."

[Related -World Growth: Mediocre or Pathetic?]

The group now expects the European economy to shrink 0.1 percent this year, as opposed to a November forecast for 0.2 percent growth. Spain will slump 1.6 percent, Italy should contract at a 1.7 percent rate, while Greece will plunge 5.3 percent. Growth in Asia will also slow as China decelerates, according to the OECD.

So What about the Banks?
Fasten Your Seatbelts!

The Institute of International Finance (IIF) is one of the largest global trade groups for banks. It represents more than 400 top world financial firms, so if anything, it has an incentive to DOWNPLAY the financial risks of a European debt market collapse.

The IIF said the majority of Spain's bank losses are from commercial real estate loans.

[Related -Bullish Sentiment Solidifies Even In The Face Of Lofty Valuations]

But that's not what it did this week. Instead, the IIF warned that Spanish banks alone are facing total loan losses of up to 260 billion euros ($332 billion). That means the banks there could need ANOTHER 60 billion euros of capital to absorb losses, money the government simply can't afford to inject into the system without torpedoing its own finances!

The IIF is far from alone, too …

Moody's Investors Service slashed its ratings on 16 Spanish banks a few days ago. The cuts of up to three notches stem from the fact "banks will continue to face highly adverse operating and market funding conditions that pose a threat to their creditworthiness." Moody's also cut its ratings on 26 Italian banks earlier in May.


How to Protect Yourself,
Right Here and Right Now!

The OECD slashed growth forecasts across the euro zone.

The simple truth is the European crisis is deepening by the day … and many European banks are taking on water and sinking beneath the waves. Plus, as the OECD said just this week, the crisis will likely spread from Europe to the rest of the world … just like our credit crisis did a few years ago.

I believe you simply have to take steps to protect your hard-earned money — right here and right now! That's why I worked closely with Weiss Ratings to produce a new, blockbuster special report called Winners and Losers in the Great Global Banking Crisis of 2012-2013.

This report is chock full of all kinds of information on the unfolding financial disaster. It explains in straightforward, easy-to-understand language why a new global banking crisis is practically guaranteed.

In its pages, you'll also find …

* A complete forecast on just how bad the coming global banking crisis is going to be (Hint: Far WORSE than anything we saw during the collapse of Lehman Brothers in 2008!) …

* Dirty secrets that Wall Street and the big three credit ratings agencies do NOT want you to know about — including countless examples of past incompetence … if not outright fraud …

* Which parts of the world look strongest based on our research — invaluable information that can help you decide what stock and bond markets have the best chances for growth in 2012 and beyond

* Exclusive access to our complete list of global bank ratings on 205 overseas banks located in 43 countries around the world

* Detailed analysis of the nine strongest global banks and 10 weakest global banks …

* My specific instructions on how to target three of the weakest banks on our list that we think will crater in value — including a step-by-step explanation of what to do for maximum profit potential …

* Plus, the three rock-solid (yet largely unfamiliar to U.S. investors) foreign banks that look like a great bargain right now — with all the necessary details like how to buy them!

Bottom line?

I believe this report will prove to be an invaluable tool in these troubled times. All you have to do is click here to get more information.

But please don't wait too long to act. Right now, we're offering a special pre-publication price of just $149. That's 50 percent off face value. If you wait until the report is released on June 1, you'll miss out not only on this crucial information, but also the early bird discount.

So please do click here. Time is running short!

Until next time,


This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.



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