Before the crisis investors assumed no euro-zone government would default on its debt.
The prospect that a euro-zone country might default on its loans, never mind leave the euro, is fairly remote.
But there is another, stormier possibility: that of renewed market turmoil caused by the risk of sovereign default or a euro-zone break-up.
Delay highlights the risks of debt default and a euro-zone break-up.
On the European Union debt crisis front, an Italian bond auction was well-subscribed Tuesday, but yields were still at or above the critical 7% level that is deemed in the danger zone for credit default.
FORBES: Comex Gold Ends Firmer On Weaker U.S. Dollar, Higher Crude Oil
Will the euro zone allow Greece to default if he resists its diktats?
As people and companies default to their less curious comfort zone, one way to stimulate people is to make them uncomfortable.
FORBES: Curiosity Didn't Kill The Cat, It Created The Mousetrap
If a messy default is forced upon a euro-zone country, it might be tempted to reinvent its own currency.
In the euro-zone crisis the threat of sovereign default renders some governments impotent, while those which could act have chosen not to do so decisively.
What Cypriots did wrong was to vote for governments that allowed or encouraged their bankers to deal with questionable individuals in a manner disapproved of by German taxpayers, and to have banks that believed euro-zone promises that Greece would never default on its debts.
Steel said the European Union is expected to hold a summit on Oct. 23 to review further measures to protect euro-zone banks from any potential Greek debt default.
The chancellor agreed to announce that the euro zone would rescue Greece if it faced default but only as a last resort, once Greece had exhausted its access to capital markets.
It was the first time euro-zone leaders accepted that a member could default and leave the euro. (And once the unthinkable is possible, why stop at Greece?) It was also the first time leaders intruded so deliberately into the internal politics of other countries.
Mr. Roseman was cautious about Mr. Corzine's bet on European bonds almost from the start, even though the CEO expressed confidence that euro-zone leaders wouldn't let the countries default.
WSJ: Corzine Rebuffed Internal Warnings on Risks at MF Global
The Economist has compiled a credit-crunch index, comprising a number of measures on everything from bank lending to the cost of buying insurance against default for banks, firms and sovereigns in the euro zone.
The real problem with the Greek debt crisis is not that Greece cannot pay its debts, it is the potential impact of a default on other sovereign nations and banks in the Euro zone (and beyond).
FORBES: Moody's Downgrades Italy, Warns Of 'Material Increase' In Funding Risks
In the current European crisis, ratings firms had begun to downgrade peripheral euro-zone countries years before bond markets woke up to default risk.
Economists around the world talk of a systemic crisis, and predict a default by Greece or Italy would result in collapse of the euro zone and a severe recession in Europe that would engulf the entire global economy.
FORBES: Time For The U.S. To Enter The Financial War In Europe
Nearly a year after it was bailed out by the European Union, Greece has been thrust back to the top of the agenda as its increasingly fragile finances put serious pressure on Euro zone members to figure out how to avoid a messy default.
FORBES: 'Inevitable' Greek Restructuring Would Cost Euro Banks $70B
Some of these theories include a collapse of the Euro Zone and a possible break-up scenario and another Greek default.
Even if the debt crisis manages to avoid the worst-case scenario of a Greek default and subsequent collapses of other sovereigns and financial institutions, the Euro zone is staring down a lengthy period of minimal or nonexistent growth for several of its members and that could challenge the earnings potential for some American companies.
It calculated that the euro zone would not risk the contagion that might follow a disorderly sovereign default.
While typical default rates for cardholders is in the 4%-4.5% zone, the HaloCard holder, say its founders, should be a lower risk and a higher spend.
FORBES: A Startup Aims To Disrupt The Charity -- And The Credit Card -- Business
Ratings agency Fitch cut Greece's long-term credit rating from B- to CCC Thursday, only one notch above default level, reflecting worries over its ability to remain in the euro currency zone.
His message was clear: The euro zone may cut off funding to the Greek government, forcing it to default on its debts and its obligation to its own citizens, but so long as it took steps to ensure Greek banks remain technically solvent, Greece could stay in the euro indefinitely.
But a disorderly default could prove even more costly: Not only would the ECB certainly lose on its bonds, but euro-zone governments would need to recapitalize Greek banks and provide them with adequate collateral to enable them to continue to access ECB lending facilities if Greece was to remain in the euro.
WSJ: Agenda: Greek Situation Is Most Serious of Latest Euro Crisis
应用推荐