All the signals are still flashing red in the Eurozone, despite the recent muddled attempt at a bailout. It is feeling more and more like the middle of 2008, when a major financial crisis was already upon us yet the authorities remained convinced that half-measures would be enough to avoid catastrophe. The parallels today are eery; Britain's establishment is obsessed with the phone hacking scandal yet several European countries are moving closer to collapse, threatening to take down the UK economy with them.
Even before Lehman Brothers went bust, pushing the global economy to the brink, all the warning signs were already there for those with eyes to see. The Fed helped arrange the bailout of another major investment bank, Bear Stearns; numerous sub-prime lenders went under; America's state-backed giant mortgage lenders hit the rocks; and the credit markets started to panic. Just three years later, many senior players are privately warning that they detect exactly the same warning signs in the financial markets. Several countries are effectively insolvent, Ireland and Greece have been bailed out yet again but interest rates on Italian and Spanish government debt remain elevated, and financial institutions are becoming more reluctant to lend to weaker players.
Toxic governments and their junk debt are the new systemic threat to the world economy. Even though financial institutions and regulators are better prepared this time around, the crisis of 2011-13, as I suspect it will eventually be named, could still inflict massive devastation. London won't be spared as it remains at the centre of global finance and is the home to numerous European financial institutions.
This is not just about banks: insurance companies, pension funds, hedge funds, exchange-traded funds and a myriad of other kinds of companies and investment vehicles own government debt. They were encouraged or even forced to do so. The usual textbook assumption is that government debt - and especially the bonds issues by strong states - is risk-free. Because countries such as Greece, Italy and Spain are all members of the single currency, it was wrongly thought that their borrowing was as safe as Germany's - in other words, investors stupidly believed that everybody's debt was backed by the better-managed European countries, that the Eurozone was a fiscal union, not merely a monetary one.
Yet when institutions lent money to countries such as Greece, they were actually entrusting their money to sub-prime borrowers masquerading as high-quality sovereigns. For all the fiddling in recent days, this still feels like a re-run of 2008, albeit on an even larger scale. Catastrophe can still be avoided, but time is fast running out.