Debt Facade Cracking in U.K. as Sovereign Contagion Spreads
by Mike Larson
When Greece’s markets first started cracking wide open, a lot of claptrap spewed forth from Wall Street. The general consensus:
• The problems in Athens would stay bottled up in Athens.
• They would remain “contained.”
• They didn’t mean anything for larger economies, including the rest of Europe, the U.K., or the U.S.
Me? I told you the exact opposite …
I said the implosion in Greece’s stock and interest rate markets — stemming from concerns about that country’s massive debt and deficit problems — were a huge red flag. They foretold a collapse in other sovereign debt markets, with collateral damage in currencies and equities.
Lo and behold, markets are now weakening worldwide. And this week, the contagion spread to the U.K. The British pound got hammered, while the FTSE 100 Index rolled over, amid concern the U.K. would be the next domino to fall!