Asian Stocks Could Slump Up to 40% in Worst Case Scenario

"I think a lot of people don't realize that if the whole situation in Europe blows up, it will affect bank lending globally," Tay explained. "In Asia's case, for instance, out of $100 in foreign lending, $50 is actually provided by the European banks, so if the European banks have to actually recapitalize, then you have the problem with the short-term interest rates actually moving up."