"It is not just that growth appears to be flagging everywhere, even in China. It is the concern, cruelly exposed in Greece, Portugal, Ireland, Italy, Spain and even the US, about the solvency of nation states. Back in 2007, the one comfort for markets was that a banking crisis never became a sovereign debt crisis. Now it has, and markets are scared witless as a result."
http://www.guardian.co.uk/business/2011 ... ugust-2007
'As this fear spreads, another ghost of 2008 returns: short-term funding risks. As a brilliant paper from the Peterson Institute points out, the structure of the eurozone system has encouraged its financial institutions to become heavily reliant on short-term funding; the 90 banks covered by the recent European Banking Authority stress tests, for example, need to refinance €5,400bn of debt in the next two years, equivalent to 45 per cent of European Union gross domestic product. Until recently, it was easy to roll over these funds because of the implicit moral hazard in the eurozone (it was assumed nobody would default) – now this assumption has cracked. There is thus a rising risk of an accelerating capital flight. Short-term funding could yet dry up, as it did for dollar-structured investment vehicles in 2007, and Bear Stearns and Lehman Brothers in 2008. Particularly since the unpredictable actions of credit rating agencies are – once again – fuelling market fears.'
http://www.ft.com/cms/s/0/6691437a-beb3 ... z1U546FvEZ
