As I said in July, I expect contagion to be a real concern regarding the dithering policy approach. I believe the sovereign debt crisis will continue to deteriorate further for just this reason.
…..So, what happens is that the crisis rolls through. More and more countries in the euro zone get plucked off and put into the penalty box. First it was Greece. Then it was Ireland and Portugal. Later the crisis rolled into Italy and Spain.
There are ever fewer players left to skate. Now we see Belgium in big trouble. Austria and France cannot be far behind. Once France has difficulties, the core only has one country, Germany, which is a truly large economy, capable of shouldering any burdens. In my view, that is the end of the line.
via Chart of the day: Greatest Credit Deterioration Focus – Belgium, Spanish banking | Credit Writedowns.