Fears of the Greek contagion are spreading with the latest news that Spain has been downgraded by Standard & Poor's. This comes a day after S&P cut Greek debt to junk status and pulled Portugal down two notches.
It's a bad sign and economist Nouriel Roubini, one of the few economists who could see the global financial crisis coming, has warned that Europe's financial woes will damage global credit markets, disrupt the economic recovery and potentially destroy the 11-year-old European monetary union. "The reality is that what has happened in the last few months is the first test of the viability of the European market," he says. He believes the chances of the monetary union breaking up have increased significantly.
When it comes to trends, Roubini has a solid track record. Pension funds and banks are panicking and selling the euro and Morgan Stanley is canvassing the prospect of a Eurozone break up.
The end of the EU looks more likely every day.
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