Once again, stock market around the world has been rocked and pounded by this unnerving round of panic and fear brought about by the uncertainty of the European dept crisis. It was almost 18 months since P.I.G.S has been coined to refer to the country with sovereign debt crisis. Today, Portugal, Iceland, Greece are on life support and Spain are exhibiting worrying symptoms.
Lately, Italy has joined the list of sick countries. France and Germany, the health ones are suffering from the global slowdown and all the woes that come with the American sovereign debt downgrading.Investors around the world are getting more worried about Greece. Clearly we see the European market pummeled this week and the American market too was badly battered this week. Asian market was not spared as well. Many have even speculated that Greece will default this weekend. The price of Greek bonds do suggests that this is a certainty, only a matter of time or some intervention from the richer countries will help it wriggle out sovereign default.
When this happens, no one knows the calamity and tumult it will generate in the world, especially the European banks. How it will spread and whether it is contagious enough affect the rest of the weaker European countries whose debts are also on the brink of collapse..
Many analysts have voice the need to change the way European Union operated. The eurozone nations have enjoyed the benefits of a shared currency and uniform monetary policy since its inception in 1999. However, the country never had a common approach to fiscal policy. The German are by far the most discipline and prudent. But other countries are very much driven by domestic politics. In a democratic environment, the desire to win an election has compelled many politicians to do popular things that eventually hurt the country financially in the longer term.
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