Deja vu, all over again

The credit crunch is back.

The Financial Times reports that European Banks have sold only two thirds of the bonds required to cover the debt that matures this year. This has left a funding gap of $241 billion. That is a big nasty number.

This funding crisis is just another manifestation of the sovereign debt crisis. As the probability of a sovereign default has increased, investors have shied away from European banks holding government bonds.