Economics columnist Robert J. Samuelson gives a good explanation of what’s going on in the European economy:
Europe’s banking crisis — and “crisis” is used advisedly — tells us how much and how little has changed since the onset of global financial turmoil in September 2008. Then, people worried about the viability of major American banks, loaded with “toxic” mortgage-backed securities whose value was difficult to determine. Now, people worry about major European banks, loaded with government (a.k.a. “sovereign”) bonds whose value is difficult to determine. We are flirting with another financial crisis not unlike the post-Lehman Brothers panic.
So American financial institutions were pulled down because of bad loans on houses. European institutions are on the verge of being pulled down because of bad loans on whole countries.
Read the column for the details: Is another financial crisis looming in Europe? – The Washington Post.