Another Financial Crisis?
Steve Eisman, one of the investors who predicted the 2007-2008 financial crisis, has more scary news, but this time, regarding European banks. The Business Insider published the following:
His concern is that European banks — particularly Italy's — hold bad "non-performing loans" that are improperly valued, posing a very serious risk to the banks' solvency."In the Italian system, the banks say they are worth 45-50 cents in the dollar. But the bid price is 20 cents. If they were to mark them down, they would be insolvent."
In short: If many European banks admitted the true value of their loans, they'd go under, Eisman believes — potentially sparking a new financial crisis.
Part of the reason for the 2007 financial crisis was all of the families defaulting on their subprime loans. There is definitely a parallel here, and I can see why Eisman is predicting another financial crash. If Europe actually is "screwed", what do you think the repercussions will be for the global economy?