Greece Nearly Bankrupt?
In what could prove to be a test to great to bear for the Euro, Greece appears on the verge of bankruptcy. This week their debt was downgraded to BBB+, which is the 3rd lowest investment grade on the Fitch Ratings scale. With debt expected to rise to more than 120% of GDP next year, many analysts are highly skeptical that Greece can cover the deficit. The fallout if Greece does default would be a big test for the Euro and could very well cause the beleaguered dollar to surge. In fact, this week the dollar has already gained against gold and other currencies. News Max reports:
“The likely rise in public debt to more than 120 percent of GDP next year and further to 125 percent in 2011 would leave the public finances highly exposed to shocks,” Fitch analysts wrote in their report.
Experts are concerned that a Greek bankruptcy could spread to other countries in Europe.
“Greece is a whole lot more important than Dubai,” Uri Landesman, a fund manager at ING Investment Management, told Bloomberg.
“There are a lot of banks, in Europe especially, that have exposure to Greece.”
