The Economist: Domino Theory – Assessing the risk that Greece’s woes herald something far worse

The Economist: Domino Theory – Assessing the risk that Greece’s woes herald something far worse
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“HOW far is it from Athens to America and which countries lie on the way? That may sound like an esoteric geography question, but it is being asked by investors as Greece’s debt crisis creates global jitters about the safety of sovereign debt. So far Portugal, Ireland and Spain, the other high-deficit countries on the periphery of the euro zone, are thought to be next in line.”

“The stakes are high. A sudden loss of confidence in all sovereign debt, and especially in American Treasuries, the world’s benchmark “risk-free” asset, would have calamitous consequences in a still-fragile recovery. Equally, an exaggerated fear of sovereign risk could prompt governments into premature fiscal austerity, which might itself push the world economy back into recession.”

Full Article: http://www.economist.com/businessfinance/displayStory.cfm?story_id=15542877&source=features_box2