Traders are now warning we could be headed for a market crash, more severe than the one that followed the 2008 collapse of Lehman Brothers that sent the global economy into a tailspin.
The Telegraph reports that insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group's implosion nearly three years ago.
"I think we are heading for a market shock in September or October that will match anything we have ever seen before," said a senior credit banker at a major European bank told the paper.
MSN Money points to several reasons why another crash is coming: the market is already too overvalued so it's heading for a fall, the Fed and other regulators are getting nervous, too many are bullish and expecting the worse, which becomes self-fulfilling, people still owe way too much money, and the real unemployment figures are a lot worse than what we're told.
Commentator Tony Pallota says it's like 2008 all over again. "In 2008 history witnessed the failure of Lehman, AIG and the GSEs. Today history is bearing witness to sovereign nations on the brink of failure. In 2008 there was the threat of bank runs. Today there is the threat of currency runs. In 2008 there were government bailouts. Today there are central bank bailouts."
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