(Washington Post) Greek Euro exit would hit at home, but fallout could be global

Posted by Kendall Harmon

There could be immediate risks to the Spanish and Italian economies: Tens of billions of dollars have left those nations in recent months as investors doubt their ability to both control rising public debt and boost their economies from recession. A Greek departure from the euro would, officials and analysts fear, push the lack of confidence in the euro zone to another level, accelerate that capital flight and leave one or both nations close to economic collapse.

It is a pattern reminiscent of what happened in Latin America and Asia in the 1990s, and it is the most likely way that a Greek exit from the euro could ignite a global round of financial contagion. The risks were highlighted Thursday when the Moody’s rating agency cut its assessment of Spanish banks, saying it had less confidence in the ability of the Spanish government to support the country’s financial system.

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Filed under: * Economics, PoliticsEconomyEuroEuropean Central BankThe Banking System/SectorPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010GreeceItalySpain

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Posted May 18, 2012 at 5:55 am

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