The year 2008 will long be remembered as the start of the Global Financial Crisis which was triggered by defaults in sub-prime lending in the US and a downturn in the housing market.

A global slump in economic growth followed along with a considerable amount of pain resulting from losses in failed financial institutions, mortgagee property sales and failed businesses. In response to the crisis, central banks and Governments rushed in with bags of money to shore up the ailing financial system and to stave off what could have been the worst economic event since the Great Depression.

The trouble is central banks and Governments now find themselves in the same position as the fabled Dutch boy with his finger in the hole in the dyke, trying to prevent a major disaster. Somehow this temporary measure needs to be replaced with something sustainable. There is a limit to how long a finger can be held in a dyke and the challenge for the financial system is how to deal with the increasing amount of debt faced by governments, particularly in Europe.

There is potentially another crisis looming.

Already share markets are reacting nervously to the situation in Greece, where the Government budget deficit has now reached around 13% of GDP. Ireland, Britain Portugal, Italy and Spain are not far behind. Yields on Greek Government bonds have increased dramatically as the risk of default rises.

If the Greeks do not regain market confidence, they may not be able to refinance debt that falls due in the next few months and then the government would default or have to be bailed out. If Greece falls over, the cost of borrowing for other euro countries would go up as well.

Investors in international bond markets will need to proceed with caution over the next few months.