Three years ago, the collapse of Lehman Brothers, the US investment bank, triggered a domino effect that had calamitous consequences for the world. No one knew how many institutions had lent money to Lehman, or how many might be pulled down with the bank. Fear spiralled through the financial markets and central banks worked overtime to prop dominoes up. The result was a painful recession.
This time, some of the dominoes are nations. Greek debt is about three times the size of that of Lehman Brothers. Around half of it is held by foreign investors, who will be hit if Greece defaults. Add in Spain and Italy, which represent about 28 per cent of eurozone GDP, and the numbers get scary. Add in a leadership vacuum, and investors start asking why they should keep lending to countries such as Italy that are troubled but still solvent…
That Europe has reached its Lehman moment is substantially the fault of its myopic and reckless power elite.
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([London] Times) Camilla Cavendish–Tomorrow looks like Black Friday for Europe
Three years ago, the collapse of Lehman Brothers, the US investment bank, triggered a domino effect that had calamitous consequences for the world. No one knew how many institutions had lent money to Lehman, or how many might be pulled down with the bank. Fear spiralled through the financial markets and central banks worked overtime to prop dominoes up. The result was a painful recession.
This time, some of the dominoes are nations. Greek debt is about three times the size of that of Lehman Brothers. Around half of it is held by foreign investors, who will be hit if Greece defaults. Add in Spain and Italy, which represent about 28 per cent of eurozone GDP, and the numbers get scary. Add in a leadership vacuum, and investors start asking why they should keep lending to countries such as Italy that are troubled but still solvent…
That Europe has reached its Lehman moment is substantially the fault of its myopic and reckless power elite.
Read it all (requires subscription).