Debt problems in Europe have overwhelmed the news recently. Specifically, the rest of the world is very concerned that Portugal, Ireland, Italy, Greece and Spain will not be able to pay back their current debts. As a result, no one will lend them new money unless they are handsomely rewarded for taking on increased risk. That being the case, new bond auctions from these countries have had to offer bonds with very high yields in order to entice lenders. This graph from Bloomberg is a nice illustration of that point:
With Greece being at the forefront of this mess, this graph from Reuters demonstrates which countries stand to lose the most if Greece defaults on their obligations. One thing is clear, a Greek default would resonate throughout Europe and the rest of the world.
Sources:
Bloomberg
Reuters
