This morning I woke up to the following headline: Before the Bell: Stocks set to plunge on Fed, Portugal worries (Globe and Mail, July 10, 2014). While many would no doubt centre on statements from the June FOMC meeting one of more important aspects of the story may well be that Banco Espirito Santo of Portugal was covering up a potential $1.8 billion hole in its accounts through accounting chicanery. Banco Espirito apparently missed a debt payment.
Banco Espirito Santo may be a small bank when put beside the global behemoths but oddly it is sometimes these small banks are the source or start point of a global banking crisis. The Dow Jones Industrials (DJI) fell roughly 1% in early trading. The other concern of the markets was statements from the FOMC that “market participants were not factoring in sufficient uncertainty about the path of the economy and monetary policy”.
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