European banks are in bad shape – and this is being VERY kind. With all of the problems that the sovereign nations are facing, the stress on the banks has been increased. Austerity is by far not a good solution for the banking industry. A sovereign default is definitely not beneficial. Cuts to credit ratings is unhelpful. High unemployment cuts into their profits. Basel rule implementation hurts profitability…and so on.

If you have not seen the actual losses for investors in many of the banks within the EuroZone, here it is. Not a pretty sight.

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The average return, year to date is NEGATIVE 26%. Amazing that markets have just started to correct over the past month or so and banks have been in a correction since the beginning of 2011. That in itself was a nice clue that something was not right under the surface.