One by one, country by country, the Eurozone’s PIIGS (Portugal, Ireland, Italy, Greece and Spain) are succumbing to the excesses of the credit expansion era that saw out of control government spending and banks lending to businesses and consumers who now can’t pay the loans back. At the same time, the traditional way banks make profit has also disappeared as banks are not doing much lending any longer, even with historically low interest rates.
The latest victim of these problems is Portugal as the Portuguese banks of late have been crying to the ECB the last three months for more financing. They had been aware of the problem since November when Portugal’s central bank claimed “the country’s banks faced an “intolerable risk” unless the government manages to bring its public spending under control as it struggles to combat a debt crisis.” Did they not see this risk coming? While government can be blamed for never cutting spending, aren’t the banks also to blame?
We’ve already seen the problems with Greece and Ireland. Portugal is only the latest in line of the PIIGS to have problems. Who’s next? To answer that question, read on, but first, lets look at what’s going on with banks in general.
Flashback To European Bank Stress Test Results July 2010
On 7/21/2010 I wrote an article European Bank Stress Test Results Prediction where I contemplated the results.
This is an article I wrote for Seeking Alpha and the rest can be read by going here: http://seekingalpha.com/article/260145-failed-european-bank-stress-tests-more-reasons-to-own-physical-gold-and-silver
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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