Invesco's Greenwood warns of another credit crunch

Invesco Perpetual's Nick Mustoe and John Greenwood have warned the eurozone crisis could turn into a credit crunch style event akin to the Lehman collapse as banks tighten restrictions on lending to each other.

The group's CIO and chief economist said a credit crunch could be the next stage in the intensifying crisis. "Investors should not forget the last financial crisis and the banks' reluctance to lend to each other. The banks are now imposing a tightening squeeze that could lead to another credit squeeze. We are moving closer to that, there is another stage to go." In a webcast this morning, both agreed the eurozone debt crisis is the biggest risk to the markets but Greenwood said a credit crunch for the banks could spill over and make Europe's problems even worse. Mustoe added one of...