Perhaps Europe’s governments don’t want to spend more money bailing out banks.Perhaps corporate managers don’t want to dilute their shareholders.We can see that in how the health of Europe’s banks has become a major concern of investors and policymakers.Bank shares in Europe have been hammered as fears erupt that they are too weak to take the body punches dished out by the euro zone government debt crisis. Greece is heading for a default as politicians and bankers bicker over the terms of its second bailout.Pressure is growing on Italy as its borrowing costs rise. The euro zone economy could be sinking into a recession. But on top of all that, a new risk is emerging: The intensifying sovereign debt crisis could be expanding into a wider financial sector crisis.And once again, the jitters have been exacerbated by a lack of action from both politicians and bank managers across Europe, who continue to insist that no problem exists.If such denial and delusion persists, Europe could end up facing not just a hard-to-solve debt crisis, but also an expensive, destabilizing banking crisis.
As my colleague Stephen Gandel showed the other day, American banks could take a hit if Europe’s banks falter.They must be strong enough to withstand the risks of sovereigns and weak growth. If it is not addressed, we could easily see the further spread of economic weakness to core countries, or even a debilitating liquidity crisis. European banks, especially French banks, are having trouble getting financing.Lenders around the world simply don’t want to take on more exposure to a European banking sector burdened with potential losses from weakening euro zone government bonds.3 Summer university credit programs abroad with Queen’s university.Our core product has traditionally been our International Summers program for Canadian high school students with 28 experiential education summer programs in Europe, Latin America, and Asia.