How European sovereign debt became the new sub-prime
The New York Times has a great piece today on how banks became so exposed to the sovereign debt of European countries with a history of defaulting. Here’s the nub of the argument: “How European sovereign debt became the new subprime is a story with many culprits, including governments that borrowed beyond their means, regulators who permitted banks to treat the bonds as risk-free and investors who for too long did not make much of a distinction between the bonds of troubled economies like Greece and Italy and those issued by the rock-solid Germany. Banks had further incentive to overlook the perils of individual euro zone countries because of the
