Still no solution in sight as the Eurozone free falls

Sunny and traquil Greece in the midst of turmoil

The Eurozone debt is the hottest news in financial land. The outcome of the crisis will affect everyone on the planet for better or for worse. Americans may have emerged from their fianancial crisis somewhat intact for now but they have already come to the uncomfortable awareness of the interdependence with China, which both supports and constrains the U.S. economy and both challenges and liberates U.S. companies. The Eurozone crisis might seem far away enough for the rest of us and the forthcoming American election may keep Americans pre-occupied for now but real danger lies ahead.


Financial experts claim that the European and U.S. credit crunch was caused by greedy bankers who invested in reckless deals but an equal share of blame is laid at the foot of politicians who created the dubious policies including the EU. Now Greek is in debt and no other country in the Eurozone can bail it out.

The problem is that it’s not the overall size of Greek sovereign debt which is in the neighborhood of $400 billion that could bring the world down, it is the fear that the Eurozone could blow up. Fear leads to more selling, more uncertainty and thus raise the tension and potential that the crisis will be self-fulfilling. U.S. stocks have done badly but not nearly as badly as European shares, especially those of European banks. If the Euro does grumble it could lead to a serious global credit crunch.


What has happened so far:

04 Oct 2011 - Debt crisis
Eurozone ministers indicate Greek bondholders may have to take bigger losses on their debts, although deny there will be a default, as markets fall again and Wall Street enters a bear market.


04 Oct 2011 - Dexia shares hit all-time low despite 'guarantee'
Shares in Dexia have hit an all-time low despite a joint statement of support for the troubled Franco-Belgian lender from the French and Belgian finance ministers.


04 Oct 2011 - US is 'innocent bystander' in euro debt crisis
Federal Reserve chairman Ben Bernanke has said that US authorities are 'innocent bystanders' as European leaders grapple with a debt crisis that is now damaging confidence in the world's biggest economy.

04 Oct 2011 - Eurozone to increase private sector burden in £136bn Greek bailout
Fears of a debt default by Greece were fuelled after eurozone finance ministers said they would increase the private sector's burden in a second €159bn (£136bn) bailout for country.


04 Oct 2011 - France, Belgium 'quarantee' Dexia finances
The French and Belgian governments have stepped in to quarantee the finances of Dexia to calm investor fears after shares in the troubled bank tumbled more than 37pc on talk that it will be broken up.


04 Oct 2011 - Who's next as Dexia takes first step towards rescue?
So after more than a month of speculation and rumour, Dexia looks set to become the first French lender to succumb to the inevitability of a state-led rescue as it stands on the verge of break-up.


04 Oct 2011 - Moody's threatens to downgrade Dexia
Shares in Dexia fell more than 10pc on Monday as fears grew that the Franco-Belgian lender may need a bailout three years after being rescued by the authorities during the last financial crisis.


03 Oct 2011 - Debt crisis: as it happenedMarkets set for a volatile day after Greece said it would miss its deficit target and eurozone finance ministers meet to find a way to unlock a vital loan aid for Athens.
03 Oct 2011 - Greece told 'no more concessions'
US stocks sank to a one-year low as fears rose that Greece’s worsening financial woes and a likely default were triggering a second global banking crisis after eurozone finance ministers get tough on the debt-laden nation.


03 Oct 2011 - Greece default 'is not an option'
Jean-Claude Juncker, head of the Eurogroup meeting of eurozone finance ministers, has vowed that a Greek default is not an option and will be avoided even after Athens' admitted it would miss deficit-reduction targets.