Thanks to statists, massive deficit in Greece and Portugal threatens banks

GROWING fears over ballooning public debt in Greece and Portugal have sparked a fresh round of global credit markets jitters, which threaten to increase funding costs for Australian banks.

The market for credit default swaps - which gauge the risk of default by a company or government - suggest that investors are increasingly anxious about lending on global markets.

A wave of pessimism this week has driven CDS spreads on debt issued by the federal government and the big banks to their highest levels in more than six months, even though Australia's finances are widely seen as sound.

The once-obscure CDS market registers on many investors' radar because it was an early pointer to the credit woes that triggered the market meltdown of 2008.

LNK

Thanks to statists, massive deficit in Greece and Portugal threatens banks

Thanks to statists, massive deficit in Greece and Portugal threatens banks

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