Global Worries Over Greece


After dominating headlines for months, Greece continues to be the catalyst that keeps traders awake at night. The country has yet to show any indication that it will accept or decline the terms of a proposed bailout and default with the private sector.

The issue at hand isn’t whether Greece will actually default or not – that is all but certain. The real question is when will Greece default and be done with it? The longer talks continue, the more investors scratch their heads and wonder why a hard default hasn’t occurred yet.

And that sort of unsettling behavior has had a ripple effect on U.S., Canadian and Latin American equity markets. Any time any sort of news about Greece comes out, markets close lower on the day out of some perpetuated fear. For instance, in Monday’s trading, the Dow Jones Industrial Average closed down 17 points at 12,845 while Brazil’s BOVESPA Index fell slightly to 65,029 after posting gains for five straight sessions.

The consensus among market participants seems to be that a Greek default is priced into the market but that a default need happen sooner rather than later to quell fears for participants. Citigroup recently announced that there’s a 50% chance risk that Greece could leave the European Union in the next 18 months. Perhaps Twitter user Rob Lock (@thegardenerrob) summarized the situation best in a recent tweet: “Oh #Greece a tragedy in waiting …….do hurry up!”

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