Markets slide on Greek debt woes

Stocks fell sharply around the world Tuesday as fears spread that Europe's attempt to contain Greece's debt crisis would fail. The euro fell to its lowest point against the U.S. dollar in a year.

The S&P/TSX composite index dropped 165.65 points to 12,030.86.

Commodity stocks led the broad-based decline in Toronto as investors sought the safety of the U.S. dollar, which in turn drove other currencies lower and depressed prices for oil and metals.

The Canadian dollar tumbled 1.39 cents to a five-week low of 97.56 cents (U.S.), while oil fell $3.45 to $82.74 a barrel.

http://www.theglobeandmail.com/globe-investor/markets-slide-on-greek-debt-woes/article1556662/

Spain looks like they will probably need some kind of bailout and they make up a much larger share of eurozone GDP than Greece.

There are also other countries that need help and their economies aren't growing fast enough to close the budget deficits. The deficits are only growing. Government bond yields are soaring as the market speculators attack country after country in Europe.

The one-size-fits-all monetary policy of the European Union looks like a failure at this point. The eurozone economies are just too diverse for that. Greece alone got a $140 Billion bailout. For a country of only 11 million and a GDP of $330 billion, that's insane. That would be like the US getting a $5 trillion bailout.

Spain might need $800 billion. That's the figure that's being floated right now. Germany can't possibly foot the bill for all this and neither can the IMF.

I have a hunch this will not end well...it's gonna get ugly.

The Eurozone has been doing fine for years and years. It's this latest 'recession' that's tossed a monkey wrench into the world economy.

The UK and US look to be in better shape because they have control of their own monetary policy. The US and UK also have more growth potential and their own currencies.

They can print money at will and devalue their currencies through other means via open market operations. Individual eurozone countries don't have that luxury. Government bond rating agencies like Moody's, and S&P factor this in.

But I disagree on monetary policy. The EU is like the US in that it has individual states. The US won't go broke because of California, and it wouldn't help California to have it's own money.

Greece joined the EU because they were already printing too much money, and had high inflation.