Eurozone sovereign debt is new subprime

As the bets that European banks made on US mortgage investments went
bust a few years ago, bankers piled into what they saw as a safe refuge:
bonds issued by countries in Europe's seemingly ironclad monetary
union.

Now, the political and financial crisis engulfing the
continent has turned much of that European sovereign debt into the
latest distressed asset, sending tremors through global financial
markets not seen since the demise of the investment bank Lehman Brothers
more than three years ago.

This week, shortly after European leaders formally
conceded that Greece could not pay its debts and forced banks to accept
losses, the shock waves reached Italy, the third-largest economy in the
euro zone after France and Germany. And despite frantic efforts by
politicians to contain the damage, market analysts said that France, one
of the strongest countries in the euro zone, may soon feel the impact.