The Dow Jones Industrial Average
|Dow Jones Industrial Average||-203.66 [-1.57%]||12,759.15|
The market was down today as investors grew concerned over the Greek bailout. The Institute for International Finance warned that a default by Greece could deal over a trillion dollars in damage to the European economy. Investors are worried that if conditions in Greece and the rest of Europe continue to worsen, the U.S. could also experience a slowdown. A key piece of the 130-billion-euro ($172 billion) bailout deal for Greece is a voluntary bond swap with a deadline of Thursday.
Instead of the the Greek government defaulting, investors holding a total of roughly 200 billion euros of Greek bonds are being offered a package worth 46.5% of the face value of their bonds. Of the 46.5%, 15% will be swapped for two year bonds. The other 31.5% will be new long-term Greek bonds with riders that increase the payout if the Greek economy outperforms expectations. The Greek government needs at least 66% of bond holders to agree to the swap. If it meets that threshold, the Greek government can require the remaining holdouts to agree to the swap. A bailout was needed so Greece could avoid defaulting on 14 billion euros in bonds due March 20. If the debt swap fails, investors are unsure the contagion Greece could create.
In other bad news from around the globe, Brazil added to the negative news today when it reported growth of just 2.7% in 2011. This is markedly below last year's growth of 7.5%. The news pushed Brazil's main index down 2.7%, with 65 of its 70 stocks off for the day. The market is also still reacting to China's news yesterday that it will target a 7.5% growth rate. This is lower than the 8% growth rate the country has been targeting since 2004. Fool analyst Rick Munarriz isn't worried, however, and has written about Chinese stocks he's keeping an eye on.
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