Has A Southern European Bank Run Begun?

Yes a huge bank run has begun as the European financial crisis is quickly growing worse. Fearful businesses, institutions and individuals are pulling their savings out of banks in financially troubled nations such as those in Italy and Spain, the 3rd and 4th largest European economies. This bodes badly because these nations desperately need to attract money to pay their bills especially at a time when bond sales are so weak and interest rates to attract that money are soaring. Banks that suffer a run on their deposits will have trouble loaning to governments or to businesses, which will help sink their economies.

It also means to rescue those economies will take far bigger bailouts than were projected only a short time ago. But from whom will those bailouts come? Germany? China? European Central Bank? IMF? They don't have enough financial resources. But even if those bailouts arrived, these financially troubled nations are struggling to pay the interest on the debt they already have. How can they pay the additional interest on new debt? It is with heart felt concern for our European brethren I share this terrible but important news with you. And what hits them will soon hit the rest of us for our banking systems are interrelated and the financial markets will freeze, as they began to do in 2008 when Lehman Bros. went bankrupt. But this time the problems are of a far greater magnitude and governments don't have the resources to come to the rescue.

Dick
To learn more, please see "EU Banks Struggle to Lure Deposits: Key Funding Source Is Imperiled; Ronaldo's 4% Rate Pitch," The Wall Street Journal: http://online.wsj.com/article/SB10001424052970203710704577052301603861304.html