Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

The yield spread between the safest and riskiest eurozone bonds surged. The Greek spread reached 1,200 points and this time the fear was different. In 2010 the markets had moved against individual countries, first Greece, then Ireland. Now a wall of money was moving against the eurozone as a whole. One key indicator was American money market funds, key contributors to the cash pools from which European banks sourced their funding, huge sources of liquidity managed by giant asset managers like BlackRock. Whereas in early 2011 they were still providing as much as $600 billion in funding to European banks, from the spring they drastically curtailed their exposure.31 Over the course of the year they would reduce their commitment to European banks by 45 percent. French banks were particularly hard-hit. Even giants like BNP were not exempt. On Wall Street large bets were now being placed not just on the default of the weakest borrowers—by the spring S&P was reckoning with a 50–70 percent haircut on Greek debt and a 1-in-3 chance of outright disorderly default—increasingly, investors were betting on the collapse of the euro itself.

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