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People stroll by a company sign of troubled firm Lehman Brothers Holdings Inc.

Katsumi Kasahara/The Associated Press

Hopes are definitely on the low side for Friday's talks in Europe on the debt crisis. Maybe it's because the summit is the 19th since Greece's problems emerged in March 2010, and the previous 18 haven't had much lasting impact. Another worry for markets is that the leaders of the big four -- Germany, France, Italy and Spain -- don't seem to have a clue as to a way out of the mess.

The feeling of angst has prompted High Frequency Economics to raise the spectre that the continent could be edging towards "Euroland's Lehman moment," or that scary time in the fall of 2008 when markets began to unravel as it became clear that Lehman Bros. was going down for good.

Up until now, HFE has been a relative optimist on Europe, arguing that a breakup on the euro zone would be inconceivable because the countries have benefited so much from the single currency "that no one would ever leave voluntarily."

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But the economic forecasting firm is having second thoughts on whether the Europeans are up to the task of pulling off a solution to the crisis. "We are coming to believe that it is time to rethink that view: We have to contemplate the political reality that well-intentioned governments may not be able to agree on how to stabilize the banking system and public finances of the zone fast enough to avert a cascade of bank failures and sovereign defaults."

HFE's gloomy take is that a failure of the summit will increase the odds of a negative shock, like the Lehman Bros. bankruptcy.

"The Lehman moment of 2008 was not really a moment. It was a saga that played out over a period of weeks and months after the catalyzing event. Banks failed progressively, over a period of time. Other banks just stopped lending, and the economy then failed....progressively over a period of time. We fear that unless this summit comes up with concrete solutions, it will catalyze institutional failures and a massive credit contraction...and possible a departure of Greece from the EMU."

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