Commentary: Canadian strategist says debt will produce ‘ugly’ result

That’s the view of sober-minded Canadian strategist and money manager John Stephenson, senior vice president of First Asset Management in Toronto. He predicts a new, Lehman-like financial crisis in the next six to 12 months, only this time involving the debt of governments and European banks.

He thinks it could drive stocks much lower, to levels at which they traded, well, just after the collapse of Lehman and AIG in fall 2008. “When it happens, it’s going to happen fast, and it’s going to be ugly and very deep,” he told me in a telephone interview, adding that he expects it to be “worse than the last crisis. Last time around, the governments had some room to bail people out. They don’t have that capacity [now].”