Sunday, June 17, 2012
Memories of Lehman hang over Greek polls
June 17, 2012
“This column is called The Long View. It is meant to have a long time horizon and to have a broad scope. This is a problem.”
That is how I began The Long View on September 13, 2008. It was the eve of the “Lehman weekend” when Lehman Brothers went bankrupt. Everyone knew that the situation had to be resolved, one way or the other, before markets reopened and so, I said, for many traders a “long view” was “anything that goes much past Sunday evening”.
Here we are again. Greece votes on Sunday. Its acceptance of the terms of the bailout it received from the EU this year is in question. So, indirectly, is its membership of the euro. As there was no precedent for a large US investment bank going bankrupt, so there is no precedent for a nation to leave the eurozone.
Small wonder, then, that many now fear that Europe is about to suffer its own “Lehman moment”. The Lehman bankruptcy, of course, precipitated the worst financial crisis in generation. The economic and financial damage of a Greek exit from the euro, particularly if followed by other exits, would be quite comparable. Will it really produce such a moment?