Fear of Greek default sends stocks plunging

Washington Post
September 12, 2011

Europe’s economic crisis escalated sharply Monday as investors bet on a messy default in near-bankrupt Greece that could cost its creditors billions in losses, threatening an array of major European banks sitting on massive stockpiles of troubled debt.

Concern was mounting amid indications that European leaders — particularly in Germany, the largest donor to Greece’s bailout — may be tiring of the two-year-old fight to prop up Athens through rescue loans. Those fears drove stock markets down and sent the borrowing costs of other troubled European economies, including Italy, soaring.

The crisis was fast evolving from one that centered on the debts of profligate nations into one pivoting on the big banks that hold large amounts of those debts on their balance sheets. Underscoring the threat, France’s three largest banks — which own tens of billions of euros’ worth of bonds issued by Greece — suffered dramatic losses in share value Monday.

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