Tuesday, May 31, 2011

Danger of Greek Contagion Climbs

Wall Street Journal
May 31, 2011

As European leaders wrangle over Greece's debt crisis, investors are scrambling to assess the damage any imminent restructuring would have on the rest of the region.

Investors have long expected Greece to default on its debts, but most were anticipating it would happen sometime next year. Now, skirmishes among European leaders last week have raised the prospect that a default could come as early as mid-July—not enough time for Europe's other debt-ridden economies to right themselves.

That scenario would make contagion more likely and dangerous, sending bond yields in affected countries soaring and hurting investors.


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