Oil Spike & Debt Crisis Tipping Point on Horion?
CNBC
Could 2011 Be Worse Than 2008? Don't Rule It Out
2011 is beginning to look very like 2008 before the collapse of Lehman Brothers-except the numbers involved are much bigger this time around, according to Simon Derrick, the chief currency strategist at Bank of New York Mellon...
"This time around, the battle is being staged in the euro zone and is taking place at both an institutional and sovereign level," he said.
“If the loans extended to Northern Rock and Bear Stearns collectively amounted to somewhere in the region of 72.5 billion euros, then how does this compare to the bailouts of Greece and Ireland?”
At 195 billion euros for Greece and Ireland alone the current bailout numbers are 2.7 times larger than the help given those two banks.
“It is apparent from the recent price action in the sovereign debt markets that Ireland and Greece still do not command the confidence of investors,” said Derrick.
“With the yields on Portuguese debt rapidly approaching the same levels being paid by Ireland, it seems reasonable to say that the collapse of confidence in peripheral euro zone states is gaining momentum rather than stabilising.”
The question for the wider market is whether the collapse of confidence in sovereign nations is more important than the loss of confidence in two second-tier banks.