As of 9:45 a.m. EDT, the FTSE 100
The situation is a little better in America, where the Dow Jones
Greece at a crossroads
The center of the drama in the markets today is -- once again -- Greece. Central banks have begun preparing for the worst-case scenario -- namely, the country taking the window when markets are closed worldwide this weekend to pull out of the euro, default on its debt, and form a new currency. Now, Greece won't necessarily be leaving this weekend, but with future bailout payments on hold until Greece accepts the austerity conditions of those bailouts, the bottom line is that it'll run out of cash by early July unless action is taken to either accept austerity conditions or leave the eurozone. Complicating matters is an upcoming election in which the anti-bailout upstart party Syriza is set to increase its power.
In isolation, Greece leaving shouldn't be roiling world markets. It's just not a big enough piece of the world economy. However, when you consider that the country is a mess in all public matters -- just look at its ability to collect taxes -- the idea of it being able to execute a maneuver like creating a new currency in a very short window of time and preventing a fiscal crisis seems laughable at best.
With Greece gone, the other weak countries of Europe would come into the spotlight, specifically Portugal, Ireland, Italy, and Spain.
The bottom line is that if Greece leaves, there's going to be a period of renewed panic. To some extent that's fair, but perhaps more important is how the stand-off leads the stronger eurozone countries to negotiate with Spain and the other economically weak countries. That is to say, the impact of Greece's leaving would be very forward-looking. We need to know how it will affect the actions taken by larger eurozone economies like Italy and Spain. In an ideal world, a higher level of compromise would be reached between eurozone countries and Italy and Spain in which a more balanced budget wasn't too hard a pill to swallow, and the countries could be restructured and make long-term progress. Of course, that scenario is easier said than done. Is Spain willing to handle 10 years of anemic growth to dig its way out of this? The next few weeks could shed a lot of light on Europe's next decade.
Looking back to the Dow and American stocks, Verizon
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Eric Bleeker owns shares of no companies mentioned above. Motley Fool newsletter services have recommended buying shares of Dell. The Motley Fool has a disclosure policy.
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