And You Thought the Real Estate Bust Was Over

  BY JOHN RUBINO from Financial Sense

"This week all eyes are on Greece and Italy, which is reasonable since they’re likely to be pretty entertaining. But as incredible as it sounds, PIIGS country sovereign debt might not even be the biggest banking-system threat on the immediate horizon. It turns out that the largest European banks have held onto — and apparently failed to mark down — a mountain of crappy paper from the housing bubble

Old Debts Dog Europe’s Banks

European banks are sitting on heaps of exotic mortgage products and other risky assets that predate the financial crisis, adding to pressure on lenders that also are holding large quantities of euro-zone government debt.

Four years after instruments like “collateralized debt obligations” and “leveraged loans” became dirty words because of the massive losses they inflicted on holders, European banks still own tens of billions of euros of such assets. They also have sizable portfolios of U.S. commercial real-estate loans and subprime mortgages that could remain under pressure until the global economy recovers...."