If Greece goes…

Greek fire could singe the euro

By Richard Milne and Patrick Jenkins

May 14 2012

Contagion. It is the word markets have feared throughout the eurozone debt crisis. And a Greek exit from the single currency would bring it to the fore in ways unimagined until now.

A “Grexit” would test the firewalls erected by policy makers, judged insufficient by many investors, and put the continent’s banking sector under extreme stress. But the concern for many in the market is less the immediate impact and more the example Greece would set for other struggling eurozone countries.

“The main worry about this in our opinion is not necessarily the first order effect but what it says about the unbreakable nature of the euro,” says Jim Reid, credit strategist at ...