In recent weeks, it has become apparent that the whole euro-zone is in debt and out of its league. The periphery and the core countries have major problems with regard to their levels of indebtedness and as this becomes apparent, other countries are rapidly ridding themselves of any ties to these countries.
A perfect example is France, about a month ago it was considered to be a stable economy within the Euro and on par with Germany in it's robust stature amid all the money worries of those around it. A new twist to the tale however, is that the French banks have been engaging heavily in gambling through Credit Default Swaps (CDS). These gambles work on the premise of one financial institution gambling on the failure of another. These financial instruments are dangerous because they rely on information about a company / market which isn't accurate. This causes a lack of confidence in the banks selling and buying and results in a lowering of inter-bank lending. This is exactly the course of action which ignited and perpetuated the fall of the global economy in 2008 and afterward.
The proof that banks are reducing their lending and preparing for another rough chapter in this economic crisis is the severance of Asian banks' ties with French banks. This means that the rich Asian banks are no longer lending to French ones. This will cause liquidity issues in the French finance sector which, due to the interlinked nature of finance sectors, will cause a fall among other European financial sectors.
Fundamentally, the bad thing that happenend in 2008 to cause the financial instability is going to happen again and the French bank liquidity / solvency issues are a good indicator of what lies ahead.
