Humans are by nature somewhat myopic. We tend to focus primarily on what is right in front of us and filter out things further removed. As a result, we can sometimes overlook important factors.
As Americans, we generally devote most of our attention on American policy. We follow political maneuverings in Washington D.C., study the Fed’s most recent pronouncements and track the US stock markets. But we also need to remember there is a whole wide world out there that can have a major impact on the larger economy and our investment portfolio.
One factor that could potentially rock the world economy that a lot of American may not be aware of is the mess in the European banking system.
Not long ago, Federal Reserve chair Janet Yellen proclaimed an economic meltdown like the one we saw in 2008 will not likely happen again “in our lifetime.” Why? Because banks are “very much stronger.”
Apparently, at least some of the world’s big bankers don’t agree with Yellen’s assessment.
Over recent weeks, officials from a number of the world’s major banks have warned that the current trajectory is unsustainable, and a crash may loom on the horizon.