Are the ghosts of 2008-2009 looking to haunt the markets again?

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Are the ghosts of 2008-2009 looking to haunt the markets again?

There were many amongst us in 2008-2009 who believed that insoluble medium term sovereign debt crises would be the ultimate result of rescuing the insolvent banking system by way of quantitative easing and continual bailouts (both secretive and published). As the dangerous portents of the crises return that prediction looks correct…
According to a Bloomberg index European banking and ‘financial’ stocks in Europe fell 5.6 percent yesterday to sink to their lowest level since March 2009, the measure of banks’ reluctance to lend to each other also spiked to the highest since April of that same year. The Bloomberg Europe Banks and Financial Services Index of 46 stocks has dropped almost 10 percent in the past two sessions, to the lowest level since March 31, 2009.
In the UK the bank RBS, much maligned at the time of the crisis in 2008-2009, has seen it’s share price once again flirt with the record lows experienced during the crisis. At 51p the UK govt. breaks even on it’s rescue, Lloyds has to recover to 74p. At 21p and 31p respectively, the market for banking sector shares would have to make a massive recovery, similar to the secular bear market rally since 2010, for the govt. and tax payers to break even…. Read the full article

Source: FX Central Clearing Ltd. (FXCC BLOG)

FXCC Market Commentaries | European Crisis Looms