May 9, 2012
Financial markets' relatively calm reaction to the Greek turmoil masked rising risks Greece is on a road that leads to its exit from the euro zone, with hard-to-predict consequences.
The weekend's inconclusive elections were seen by many as a possible beginning of the end, by choice or by necessity, for Greece's membership in the common currency. If Greece is unable to form a government that can abide by the conditions of its bailout package, it faces another election in June and will be on a collision course with its rescuers: other euro countries and the International Monetary Fund.
Despite the political disorder, there are powerful forces still holding the euro zone together, and investors haven't concluded the moment for a great schism is at hand. For now, markets are gauging that it's still too painful for both sides, Greece and the rest of the euro zone, to sever ties.
Asian markets fell in early trading Wednesday and the euro slipped amid fresh concerns about Europe's monetary union. Stocks in Europe slumped Tuesday, but after a day of gains Monday.
Some analysts said that this belies extraordinary tensions inside the euro zone—and that the declines are the first inkling of a wider reassessment of the impact of Greece's woes.
"The market is really working out what the risks are," said Justin Knight of UBS. "It is a bit of a slow burner, but it is gathering pace."
More
No comments:
Post a Comment