Financial Crises in Bulgaria and Portugal

This note is a warning of financial stress in periphery countries in the house of cards that is known as Europe.  Stress typically starts in the periphery and works it's way to the core.  I've commented before that European bank capital levels still make the European financial system a systemic risk.  It was just a matter of time before kicking the can didn't work anymore.

In Bulgaria in the past two weeks, there were outright bank runs (mass depositor withdrawals) at First Investment Bank AD and Corporate Commercial Bank AD, the country’s third- and fourth-largest lenders by assets.    The most ridiculous thing is that the IMF issued an all-clear on Bulgaria's financial system just a month ago saying that, among other things, that Bulgarian banks are “stable and liquid.”

A full-fledged financial crisis emerged this morning in Portugal with the suspension of share sales of Espirto Santo Financial due to their substantial ownership of bankrupt bank Espirito Santo SA.   The highly incredible IMF said reassuringly this morning that

*IMF: POCKETS OF VULNERABILITY REMAIN IN PORTUGAL BANKING SYSTEM
*IMF SAYS IT DOESN'T COMMENT ON INDIVIDUAL FINL INSTITUTIONS
*IMF: PORTUGUESE BANKING SYSTEM ABLE TO ENDURE CRISIS

Maybe this is nothing to worry about, but with bubbles brewing everywhere -- especially in China and sputtering economic growth in the entire world, this may be the beginning of the end of a long period of "extend and pretend" by governments and their liars spokesmen.  Debt is sky high now everywhere, business is contracting and the financial systems in Europe and Asia (with few exceptions) are houses of cards.  The US is the cleanest "dirty shirt" in the world when it comes to the banking system.