Four years after Lehman Brothers suffered the largest bankruptcy in US history, a former vice president at the investment bank has warned the financial system is on a ‘collision course’ for another 2008-style event.
He expects Spain will be the next domino to fall on the world stage due to the excessive leverage in its economy and in the European banking sector, triggering a huge sell-off in financial markets.
Lehmans was leveraged up as much as 40 times before the crisis, and while European banks may not be at those levels, they are three times more leveraged than the US relative to GDP, McDonald said.
Read more: World on collision course for Lehmans 2.0?
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