European Bank Troubles Demonstrate Cost of Uncertainty: View

Financial markets’ growing concern about the state of European banks exposes a reality that the political theater in the U.S. had obscured: The euro area’s debt troubles are probably the single largest threat to the global economy.

The share prices of European banks, and in particular France’s Societe Generale SA, have plunged in recent days as investors speculate that the banks could be facing investment losses and difficulties borrowing money. SocGen has denied the rumors, but the nature and veracity of the specific concerns is almost secondary.