Greece Fuels Fears of Contagion in U.S.

The Wall Street Journal ^ | 5/5/10 | Bob Davis and Mark Gongloff

[marshmallow]

Crisis Would Likely Spread in Europe Before Crossing Atlantic, Economists Say; Wary Investors Monitor Credit Markets

Investors and policymakers are starting to worry that the economic crisis in Greece could cross the Atlantic and undermine the U.S. economic recovery, in the same way that U.S. housing woes in 2008 battered Europe.

"What we have seen is that contagion"—economist-speak for a spreading crisis—"has gone global," says Harvard University economist Jeffrey Frankel.

Early credit-market indicators of contagion to the U.S. aren't yet flashing red, but investors are keeping a wary eye on them. "This is like we've agitated a colony of prairie dogs, and everybody is looking out of their hole to see what's going on," said Howard Simons, bond strategist at Bianco Research in Chicago. "But it's no crisis, yet."

Since late last year, Greece has presented several austerity plans to pare its debt burden, and is working through details of a €110 billion ($145 billion) rescue by fellow euro-zone nations and the International Monetary Fund. However, the promise of aid hasn't had a lasting calming effect on European markets or investors.

U.S. Treasury officials have been quietly urging their European and IMF counterparts to move more quickly on the rescue plan, to contain the damage, say U.S. officials. Lobbying was especially heavy during the IMF meeting in Washington in late April. Treasury Secretary Timothy Geithner is a veteran of the U.S. effort to contain the Asia financial crisis, which began in 1997, ping-ponged around the world and eventually led to a debt default in Russia and the collapse of U.S. hedge fund, Long Term Capital Management.

There are a number of ways that a crisis in Greece can spread to the U.S., say economists, though most would require Greece's problems to jump first to larger European countries, such as Spain and.............

[Shermy]

“and the collapse of U.S. hedge fund, Long Term Capital Management.”

Can’t have a private hedge fund collapse again, no sirree!

[longtermmemmory]

Greece is toast, the six families that control Greece are toast.

This is no longer a rescue mission, this is a recovery mission of what is left.

[dalebert]

Uhhhh socialism in action...

[cripplecreek]

Mutually assured economic destruction.

[Oatka]

"This is like we've agitated a colony of prairie dogs, and everybody is looking out of their hole to see what's going on," said Howard Simons, bond strategist at Bianco Research in Chicago. "But it's no crisis, yet."

Beautiful analogy. It evoked quite a mental image - but still, Simons owes me a keyboard.

Oh yeah, the key word is "yet".

[Plutarch]

"If the problems climb up the ladder to Portugal and Spain and then to France and Germany, there will be worries about public debt everywhere," says Raghuram Rajan, a former IMF chief economist who is now a professor at the University of Chicago's Booth School of Business.

Hmmm...worries about public debt, where have we seen this...ah, yes...

Wow, now everyone is a Tea Partier!

[Leisler]

Continental Illinois, first too big to fail.

[Leisler]

He meant amongst the elite, not the dumped on soviet like American peasantry. It is their patriotic duty to swallow debts shoved down their throats.

Private profits, public losses.

[palmer]

That an economy built around carry trade will collapse should surprise noone. If an EU country’s bonds aren’t guaranteed then (ultimately) nothing is. If countries like us and Japan continue to fund “recovery” with hot money that only goes to speculative carry trade locations like Greece, then we will never have a sustainable recovery.

[FreeKeys]

HEY, economically illiterate MORONS!!
If you voted for money from the government (which it gets only by crippling and stealing from really productive people) 
you have ABSOLUTELY NO RIGHT TO BE SURPRISED
-- let alone justified to riot -- 
when the money runs out (duh) !!!!!!!!

And for you American economically illiterate MORONS
-- yes it CAN happen here!!

[FreeKeys]

bumping and pinging at the same time

BTTT!

[EyeGuy]

I’m not sure why there isn’t at least some glimmer of positive news in the fact that socialism has, ONCE AGAIN, collapsed in full view of the entire world.

[Lurker]

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abondonment of further credit expansion, or later as a final total catastrophe of the currency involved." Ludwig Von Mises

[FreeKeys]

http://video.foxnews.com/v/4181417/fiery-protests-in-greece

[BradyLS]

I agree. Coming soon to a main street near you.

[FreeKeys]

I’m not sure why there isn’t at least some glimmer of positive news in the fact that socialism has, ONCE AGAIN, collapsed in full view of the entire world.

EXCELLENT point. A gem of a post. Thank you!

[FreeKeys]

Yes, they brought it all upon themselves ... but professional moochers are usually professional gripers and blamers as well. They didn't cause ANY of these problems. Noooooooo.

[FreeKeys]

Also see:
http://www.freerepublic.com/focus/news/2508378/posts?page=1

[FreeKeys]