Eerie Similarities Surround European, Wall Street Crises
You’ll have to excuse many in the markets if it feels like that old Bill Murray movie “Groundhog Day.”
The panic gripping European bond markets in recent weeks is scarily similar to the fears that brought Wall Street to its knees two years ago.
In each case, asset bubbles imploded, financial markets seized up, leaders denied the extent of the problem, markets targeted the weakest link and taxpayers stepped in to save the day with bailouts that failed to address moral hazard.
“It’s eerie how similar that process has been. It just does not instill confidence,” said Peter Kenny, managing director at Knight Capital Group.
Both crises, of course, also share a parallel root cause: too much debt.Full article