In Case You Still Don’t Get It, Here’s Why A Greek Default Should Put Fear In Your Heart

Saturday, January 28, 2012
By Paul Martin
Jan 28 2012

NEW YORK (AP) — Remember Greece?

It’s been two years since a financial crisis erupted in the birthplace of drama, and the final act is still unfinished. A second week of talks in Athens ended Friday with no deal between the country, the European Union and private holders of Greek bonds.

Remarkably, even after the crisis became such an international worry last year that the leaders of France and Germany were actually referred to as “Merkozy,” the European debt bomb could still explode, with Greece as the fuse.

Economists and investors see a Greek default as the biggest test of the world financial system since the crisis that followed the collapse of Lehman Brothers investment house in 2008.
It is also the biggest threat to what has been a successful start to the year in the U.S. stock market. The Standard & Poor’s 500 index has gained 4.7 percent, roughly half its average for a full year, in just four weeks.
“If talks break down next week and it looks like they can’t reach a deal, it raises all sorts of risks,” says Jeffrey Kleintop, chief market strategist at LPL Financial. “The stock market could probably lose half its gains for the year.”

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