Thread: Greek debt tsunami could reach US shores

Greek debt tsunami could reach US shores

Why you should care about a financial crisis half a world away

By John W. SchoenSenior producer
msnbc.com
updated 53 minutes ago

It could be the default heard around the world. If Greece can no longer make payments on its national debt, the financial shockwaves may rock your local bank.

As the Greek government teeters and European countries appear deadlocked over a rescue plan, holders of Greek debt face the biggest immediate risk. But the question many investors are asking — just as they did when the collapse of Lehman Bros. sparked the Panic of 2008 — is who, exactly, holds that debt?

“This fear of Greek contagion breeds not only a credit crisis but a liquidity crisis, not only in Europe,â€

Asian shares slump on Greek default fears

By PAMELA SAMPSON, AP Business Writer
7:54 p.m., June 16, 2011

Market charts show Dow, S&P 500, and Nasdaq — AP

BANGKOK — Positive economic data out of the U.S. failed to provide a boost to stocks in Asia on Friday, as worries mounted that Greece will be forced to default on its debt.

Oil prices hovered above $95 a barrel while the dollar slipped against the euro and the yen.

Japan's Nikkei 225 index was marginally lower at 9,410.68. South Korea's Kospi index drooped 0.8 percent to 2,029.68, and Hong Kong's Hang Seng index lost 0.4 percent to 21,850.58. Benchmarks in Singapore, Taiwan, mainland China and Malaysia were also lower.

Australia's S&P ASX 200 rose, however, by 0.2 percent to 4,490.10. Shares in Indonesia, Vietnam and the Philippines were also higher.

Markets dipped because of fears of a Greek default, which could push up borrowing costs elsewhere, leading to crises in other indebted countries, and hurt the European banks that hold a lot of Greek bonds.

On Wall Street on Thursday, better-than-expected reports on home building and jobs pushed two of the three major stock indexes higher. The Dow Jones industrial average gained 0.5 percent to close at 11,961.52. The S&P 500 rose 0.2 percent to 1,267.64. The Nasdaq composite lost 0.3 percent to 2,623.70.

The pace of new home construction quickened last month and the number of people who applied for unemployment benefits fell last week to 414,000, more of an improvement than economists expected. Weekly applications for unemployment have been over 400,000 since April, a rate that suggests job growth is still slow.

Not all the economic news was positive. A survey by the Federal Reserve Bank of Philadelphia found that manufacturing slowed in that region, one day after a similar report found that manufacturing was slowing in the New York area. A series of weaker economic indicators over the past two months have led some analysts to trim their expectations for the year.

Benchmark crude for July delivery rose 23 cents to $95.18 a barrel on the New York Mercantile Exchange. The contract settled at $94.95 per barrel on the Nymex on Thursday.

The euro recovered slightly to $1.4173 from $1.4141 late Thursday in New York. The dollar dropped to 80.62 yen from 80.78 yen.

http://www.signonsandiego.com/news/2011 ... ult-fears/

Related Thread Here
[size=150] “We Are Doomedâ€

As Greek government teeters, IMF warns of threat to global financial stability

By Howard Schneider and Anthony Faiola,
Updated: Friday, June 17, 6:34 AM

Decaying political support for budget cuts in Europe is threatening global financial stability and could undermine a recovery that is already weakening, the International Monetary Fund warned in a trio of reports Friday.
Nations throughout the continent have put in place government spending plans that reduce record high deficits and have made other changes to invigorate their economies. But growth has been slow to return, and the cuts to social programs and public payrolls are proving increasingly unpopular — and politically difficult to sustain.
June 17 (Bloomberg) -- Maury Harris, chief economist at UBS Securities, says Greece is â€

France, Germany agree on Greek debt package

The nations resolve a dispute over private holders of Greek bonds, agreeing that they will not be forced to participate in a second bailout. Amid growing unrest, the Greek prime minister shakes up his Cabinet.

By Henry Chu, Los Angeles Times
June 17, 2011, 1:57 p.m.

Reporting from London— After days of increasing alarm among investors, the leaders of Europe's two heavyweights, France and Germany, reached agreement Friday on a key element of a second rescue package to help debt-ridden Greece avert a potentially catastrophic default.

Meeting in Berlin, German Chancellor Angela Merkel and French President Nicolas Sarkozy appeared to resolve a dispute over whether to force private holders of Greek bonds to participate in the bailout, which many are loath to do. The two leaders agreed that such investors would take part only on a voluntary basis.

European markets, which had been hammered over the last few days out of concern over Greece, immediately rose on the news of an agreement between Merkel and Sarkozy and on the back of a shakeup of the government in Athens.

PHOTOS: Clashes in Athens over Greek debt crisis

Investors have been worried that Greek Prime Minister George Papandreou will be unable to win parliamentary approval for a new round of austerity cuts to bring down his nation's massive budget deficit. That and European infighting over whether to extend more emergency aid to Athens fueled market fears this week that Greece would slide into bankruptcy.

Huge public protests in Athens against the austerity package have also shaken investor confidence.

In a reshuffle of his Cabinet on Friday, Papandreou booted his unpopular finance minister and appointed in his place a powerful Socialist party colleague who analysts say is capable of delivering the votes in parliament that Papandreou needs.

"The country must be saved and will be saved," new Greek Finance Minister Evangelos Venizelos told reporters, adding that he accepted the post as his "patriotic duty."

Papandreou will present his new ministerial lineup for a vote of confidence in Parliament next week.

In Germany, Merkel appeared to back down from her insistence that private holders of Greek debt be forced to participate in a second bailout of the Mediterranean nation by extending the maturities on their bonds. Many Germans believe that such investors should not be given a free pass in the crisis while taxpayers are on the hook to rescue Athens.

But the idea has drawn sharp opposition from the European Central Bank and countries such as France, which fear that ratings agencies would see forced participation as tantamount to a default by Greece. That, in turn, could trigger a worldwide financial crisis.

Merkel and Sarkozy agreed instead on a "softer" option that would see private bondholders take part voluntarily — for example, by maintaining their exposure to Greek debt after their current bonds come due.

The agreement between the European Union's two most influential nations helps pave the way for approval of a new EU bailout package for Greece in July, just in time for a fresh infusion of cash for Athens to pay bills about to come due.

"The quicker we get a solution the better," Merkel said.

henry.chu@latimes.com

http://www.latimes.com/news/nationworld ... 3625.story

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