Much depends on the reaction of investors in debt issued by European nations, said Dimitri Papadimitriou, president of the Levy Economics Institute at Bard College. If they fear that the crisis response is losing momentum, they will likely demand higher interest rates — not just from Greece, but from other nations seen as carrying too much debt.
The result would be rising borrowing costs for Greece as well as countries that haven't received bailouts, like Italy and Spain. Rising borrowing costs sent global stock markets diving last year. Uncertainty about the path forward in Europe may mean a return to extreme market volatility after several months of relative calm.
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Filed under: * Culture-Watch Globalization * Economics, Politics Economy Consumer/consumer spending Corporations/Corporate Life Credit Markets Currency Markets Euro European Central Bank Stock Market The Banking System/Sector The Credit Freeze Crisis of Fall 2008/The Recession of 2007-- Foreign Relations Politics in General * International News & Commentary Europe --European Sovereign Debt Crisis of 2010 France Germany Greece
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