The following post is from John Mauldin, who is a Best-Selling author and recognized financial expert. He is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore

The Risk in Europe

Naked Capitalism’s Yves Smith was on Fast Money at CNBC yesterday. She made a number of good points regarding the discussion on nationalization. One that particularly resonated with me was her assertion that the United States is nationalizing one, two or three banks every Friday through the FDIC (see list here).

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Frustrated savers are turning their backs on banks – Irish, Business – Independent.ie
UBS warns of dire consequences from U.S. tax battle | Reuters
Soros sees no bottom for world financial collapse | Reuters
German ‘bad bank’ in Dublin adds to Irish concerns – Financial Post
FT.com – ECB warns Germany against EU bail-out
BBC NEWS | Business | Stanford [...]

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An ugly day in the markets has just ended with the financial services sector taking a beating in particular. Many shares in the sector trade for under $10. Bottom fishers might see this as a buying opportunity. Is it?

There is quite a buzz in the German press about Hypo Real Estate. But, what should really get oe’s attention is its massive off-balance sheet exposures (hat tip Ulrich). The long and short of reports is that Hypo Real Estate has assets valued at 1 and 1/2 times its entire balance sheet in off-balance sheet vehicles. This would bring total exposure to German taxpayers to a cool one trillion euros (1,000,000,000,000).

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The Austrian Economists: Rick Santelli Rant
Ken Rogoff says Fed needs to set inflation target of 6pc to help ease crisis – Ambrose Evans-Pritchard, Telegraph
Japan department store sales down 9.1% in January – Japan Economy News & Blog
FT.com | Willem Buiter’s Maverecon | Home loans in the US: the biggest racket since Al Capone?
Economist’s View: “What [...]

This comes from the Danish daily Berlingske Tidene. It suggests that Citibank is cutting back all international lending. Citigroup has sold its German operations to a French bank and I understand they are cutting credit lines in the UK as well. In seeing all these stories together, one gets a full view of [...]

It is not just Eastern Europe and Switzerland where problems are popping up. This from the Berlingske Tidene, a Danish daily: