The Euro is crashing for a very good reason. Investors now think that Greece is going to default very soon, it could even be this weekend.
How likely is that to happen? Bloomberg reports that in Germany, Angela Merkel's government is getting ready to shore up German banks in the event that Greece fails to meet the terms of its aid package and defaults. Let's be clear how serious this is. If Greece defaults, German banks could lose 50 per cent of their investment in Greek bonds, and that would devastate markets around the world. Share prices will crash.
"Fear is driving everything right now," Charles Comiskey, head of Treasury trading at Bank of Nova Scotia in New York told reporters. "People are nervous about Greece defaulting this weekend. That's why you're getting this kind of jump in the market."
The world is waiting for the answers to two big questions: how long can Greece last and how close is the Greek government to giving up and throwing in the towel?
If that happens, we're likely to see Greece leave the Euro. It will be the first. And the markets around the world will nose dive.
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