Olive: Will Greece set off 'global debt bomb'?
Threat of new crisis hits shaky world economiesPublished On Sun Feb 7 2010
By David Olive
Business Columnist
The inevitable "sovereign debt panic" finally struck last week, causing severe one-day drops in stock markets from New York to London to Toronto on Thursday.
Ostensibly, the epicentre of the crisis is Greece, in danger of defaulting on its debt payments to worldwide holders of its government bonds, or sovereign debt.
But the fear about state defaults quickly spread to Spain, Portugal and Ireland, fiscal train wrecks that together with Greece now go by the unfortunate acronym PIGS.
Even then, the scope of a potential second global financial crisis so soon after the credit crisis of 2008-09 goes far beyond the euro zone, the 16 nations sharing a common currency, the euro.
Last week's dramatics could have been far worse. And they may yet manifest themselves in an ugly fashion in weeks to come if the euro-zone countries don't rescue what Greek Prime Minister George Papandreou described last week as "the weakest link in the euro zone."
Greece accounts for just 3 per cent of the euro-zone economy. The crisis in the cradle of Western civilization serves merely as proxy for government over-indebtedness everywhere. ..........(more)
The complete piece is at:
http://www.thestar.com/news/article/761755--olive-will-greece-set-off-global-debt-bomb?bn=1