ForexSpace.com - Forex traders and forex brokers at the top of their game – heads buzzing with the daily business of live currency rates and charts – would be forgiven if, having checked back in on Earth News for the first time since 2008, they find themselves pondering whether global banking history is repeating itself. One of the world’s gold-plated financial institutions goes bonkers, the euro zone descends into crisis, and the bond market experiences some form of collective nervous breakdown.

It certainly wouldn’t take a raving cynic to conclude that maybe all but nothing has been learned from the financial meltdown of four years ago. Nor, indeed, if one was to pause on any ordinary European street or American street and ask pretty much any ordinary European or American, they surely would tell you nothing’s been done to address the underlying cause of the current malaise.

The so-called ‘tempest in a teapot’ at JPMorgan – first spotted by other traders and financial experts several weeks ago – encapsulates all the wrong-headed stupidity and miscalculation that underscored the original banking crisis; when a bank anticipates $17bn in profits in 2012, a $2bn loss may not sound too bad. But JPMorgan - largely spared in the 2008 crisis – has traded on a reputation on not being just any bank. Not anymore.

And all this against a backdrop of the Greek shambles and the vulnerability of the euro zone that it exposes. As Andrey Dirgin, head of research at Forex Club, tells us: “Europe is staring down the barrel of the first ever country exiting the monetary union, the catalyst being the political crisis engulfing Greece. While the Euro has taken a hit on the markets in recent days, the sense of relief following the announcement that the newly elected President of France and German Chancellor are most likely to support Greece in the transitional period, has seen the Euro strengthen slightly.”

Nonetheless, the sentiment of ‘Beware Greeks Bearing Splits’ continues apace; the democratic crisis in the country, the uncertainty over its membership of the single currency threatens banking and currency stability well beyond the euro zone, including in the UK. Let’s not beat around the bush: this is a dangerous time. We have become inured to financial scare stories. But this is no longer a scare, it is a fact. It might be wise for us all to tune in, and hang on to our hats, or should that read back pockets?

Over time, any journalist becomes aware of the stories that bore the reader. Northern Ireland during the Troubles was one such. The Middle East generally fights not to be so too. Today it is Greek debt. What’s it got to do with us? Ostensibly little – perhaps £4 billion of direct exposure. Thus Greek debt is a bore.

But the Lehman Brothers’ melt down has taught us that consequence, in financial matters, is seldom about what you can see, but much more about what you cannot see. And so it is with Greek debt. As the former City Minister, Paul Myners, pointed recently, the UK’s “indirect” exposure to the Greek financial crisis is potentially massive – £100s of billions. Not just UK banks, but insurance companies and finance houses have underwritten, insured, and reinsured vast amounts of French, German, and Italian lending to Greece and its banks.

The British coalition government – all too aware of its own increasingly fragile-looking domestic agenda of belt-tightening and practically zero-growth – likes to portray what’s happening to Greece as essentially a euro zone problem. As the UK is not a member of the “euro club”, Prime Minister Cameron and his Chancellor sidekick Osborne like to take a seat, if anything, beyond the back seat, or even no seat at all. Hence at the recent meeting of euro zone FinMins, convened explicitly to discuss the Greek crisis, there was no UK government representative present.

Yet, perversely, what happens to Greece may well impact the UK more than any other European country. No one actually knows the exact figure of Britain’s indirect exposure to the crisis. The FT has had a go, reporting Britain is exposed to the tune of £12.5 billion in government underwriting of Greek government borrowing. Furthermore, data I’ve seen detailing the UK banking system’s exposure to Greece is an overall exposure to the euro zone of £700 billion (FT), of which £300 billion is described as vested in “weaker euro zone economies” – Greece, Portugal and Ireland.  French and German banks are the most directly exposed to Greek debt. British banks have underwritten or insured as much. So that there is a coalition of interest inside and outside the euro zone not to see Greece fail. But find me an economist who does not forecast that Greece will default – their only dispute is when, not if.

HEY! You at the back, stop yawning!

Drew Hillier. Editor