U.S. stocks fell sharply for a second-straight day as worries intensify about the crisis in Europe. In recent trading, the Dow was down 190 points, or 1.6%.
Overnight, Spanish bond yields approached the critical 7% level after a $4.8 billion bond offering garnered lackluster demand. Yields on Italian and French debt also rose as pressured mounted on the European Central Bank to intervene and alleviate the crisis.
The ECB did engage in some targeted bond purchases Thursday, which temporarily quelled concerns and helped major European bourses close off their worst levels of the day. But renewed weakness in big European banks like BNP Paribas, Societe Generale, Deutsche Bank and Credit Agricole belied hopes that any real solution was at hand.
"Always a day late and a dollar short," is how Forbes Media Chairman Steve Forbes describes the European response to the crisis. "By doing little dribbles [and] not having a real strategy what you're doing is killing the banking system."
The Europeans have a matter of days, not weeks or months, to take more dramatic action to stem the crisis, Forbes declares. Specifically, he advocates for the ECB to adopt a TARP-style program and make a "massive buy" of Italian and Spanish debt. Absent that, Europe's sovereign debt crisis could turn into a full-blown banking crisis with major "contagion" implications for U.S. banks and the global economy. (See: Forget Greece: Europe Suffers From "Banking Crisis" and "Lack of Political Will," Forbes Says)
"This is a very dangerous crisis," he says. "I'm not sure our policymakers here and in Europe fully realize the disaster is upon us."
Other than encouraging the Europeans to take bolder action, as Treasury Secretary Tim Geithner has done repeatedly, Forbes says U.S. policymakers should look in the mirror.
Instead of pointing finger at the Europeans, he asks, "how about getting our house in order?"