Beware a rerun of the Great Panic of 2008. … Europe is heading to the ‘danger zone’.
Events in Greece could trigger financial fright in Spain, Italy and across the eurozone. The summer of 2012 offers an eerie echo of 2008.
If Greece leaves the eurozone, the contagion is impossible to predict, just as Lehman had unexpected consequences.
Eurozone leaders need to be prepared to recapitalise banks. In the eurozone, the guarantees of some national sovereigns are unlikely to be sufficient and only that of the “euro-sovereign” will suffice.
It is far from clear that eurozone leaders have steeled themselves for this step. Eurozone leaders need to be ready.
There will not be time for meetings of finance ministers to discuss the outlook and debate the politics.
In panicked markets, investors flee to safe assets, sparking other flames.
http://www.dailymail.co.uk/news/article-2153324/Markets-facing-rerun-Great-Panic-2008-Head-World-Bank-warns-Europe-heading-danger-zone-bleakest-day-global-economy-year.html
ReplyDeleteThe head of the World Bank yesterday warned that financial markets face a rerun of the Great Panic of 2008.
ReplyDeleteOn the bleakest day for the global economy this year, Robert Zoellick said crisis-torn Europe was heading for the ‘danger zone’.
Mr Zoellick, who stands down at the end of the month after five years in charge of the watchdog, said it was ‘far from clear that eurozone leaders have steeled themselves’ for the looming catastrophe amid fears of a Greek exit from the single currency and meltdown in Spain.