The world faces the possibility that embattled Greece will become another Lehman Brothers by escalating the European sovereign debt crisis into a new round of global financial turmoil.

But unlike Lehman Brothers, which was denied a bailout by the US government, Greece might get the aid it seeks from its fellow members of the European Union and avoid "bankruptcy protection."

Similarities

The comparison between Greece and Lehman Brothers largely refers to their similar financial woes and the potential fallout of those woes for the global financial system.

Both Greece and Lehman Brothers were hit by a crisis and faced difficulty in paying off their debt. They also found it was increasingly difficult to sell new debt at a reasonable price and even ran the risk of being shut out of the debt market altogether.

Furthermore, both of them feared the bailout they needed could be delayed or even scrapped by politicians looking to avoid the creation of a so-called "moral hazard" or provoking a public outcry.

What is most striking is that, if Greece goes into default, it could trigger another round of global financial turmoil, just like Lehman Brothers.

The then fourth largest investment firm on Wall Street filed for bankruptcy protection on September 15, 2008, and helped turn the US mortgage woes into a full-blown global financial and economic crisis.

Some fear if Greece fails to pay off its debt, investors could start doubting the credibility of other eurozone economies, particularly Portugal, Italy, Ireland and Spain - all of which run large fiscal deficits.

Different outcome

But many observers believe Europe will eventually come to the aid of its ailing Aegean member.

The Wall Street Journal has reported that a bailout for Greece could be worked out very soon. Under the proposal, state-owned banks and bond investors in France and Germany could buy up to 30 billion euros (about US$40billion) of Greek government debt.

The Greek government, under intense pressure from EU, has also pledged to cut deficit levels, currently estimated at 12.7 percent of gross domestic product (GDP), by four percentage points this year.

The fallout from the US government's refusal to rescue Lehman Brothers may also work in Greece's favor.

Back then, the US government did not want to be perceived as a safety net for reckless speculators, nor did it want to enrage the American public by using taxpayer money to rescue a private firm that might have played a substantial role in creating the financial crisis in the first place.

But things got out of control rather quickly after Lehman Brothers went bankrupt. Major world stock indices went into free fall and the global financial system was teetering at the brink of total collapse.

The US government, in fear of a total financial catastrophe, was then forced to commit more money to rescue other financial institutions, including the American International Group.

So the European Union and large eurozone economies will pay more attention to stabilizing Greece so that it will not default on its debt and drag down the whole region, regardless of the moral hazard, some analysts say.

Other worries

But Europe's worries don't end with a bailout of Greece. Investors have already piled on bets against Portugal, Italy, Ireland and Spain.

Latest figures put the public debt levels of those countries at 75.2 percent, 115.2 percent, 63.7 percent and 59.5 percent of GDP, respectively, almost all higher than the EU's stipulated public debt level of 60 percent.

Bets against the sovereign debt of Portugal, Italy, Greece and Spain, known as PIGS trades, are "crowded," according to a MarketWatch report, quoting sources with Brevan Howard Asset Management, one of Europe's largest hedge funds.

Meanwhile, market participants are expecting Britain, also mired in a large fiscal deficit, to be the next target for investors.

Bloomberg reports investors are busy preparing for the UK to be next.

Turcan Connell, which caters to rich families, expects the pound to lose between 20 and 30 percent against the dollar once investors turn their sights on Britain as the government sells a record amount of debt.