Greek/Euro financial crisis made easy

Euro area Finance Ministers so far have failed to find enough common ground on the next steps to address the Greek crisis, which continues to deepen inexorably. Credit rating agencies are mounting the pressure on Greek banks and financial institutions which are deemed to have material exposures towards Greece. All this is amplifying uncertainty and -- by reflex -- market volatility. Against this backdrop, Greek two-year yields reached their EMU era peak of 28%, and the euro hit a one-month low.

Sovereign bond yields at the periphery, Italy included, are all trading at distressed levels, close to one-year highs, as fears of contagion escalate. This is not a good sign.

Greece’s situation, and the euro area’s sovereign crisis, have reached a new level of uncertainty.

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