A Scary Warning From Portugal About Europe's Doom-Loop Risk

Pedestrians pass an Banco Espirito Santo branch in Lisbon on March 30, 2012 Photograph by Mario Proenca/Bloomberg

Why would financial problems at a little-known Portuguese bank send a shudder through markets worldwide? It happened today, as equity markets slumped sharply after the parent company of Lisbon-based Banco Espírito Santo missed payments on its short-term debt.

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