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Concerns about Greek bankruptcy collapsed European markets

08 February 2010 / 10:02:35  GRReporter
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Abroad news from Greece are not good at all. An article in Financial Times quotes kiosk owners, complaining - "We do not sell as many foreign magazines or imported chocolates as before. It is good that at least we still sell Sunday newspapers and cigarettes. In these times people do not know how much to spend – they watch the news and think that an apocalypse is coming." The magazine mentions that next week there will be two big strikes - a sign that confidence in the government is slowly disappearing. Among other things Greek problems start influencing prices of Spanish and Portuguese securities. 

Another respected Western newspaper - Wall Street Journal – published an article entitled "Is it possible for Greece to be governed,” where it is claimed that in order for the country to get out of the crisis, all citizens need to abide by the state laws and they need to have a sense of common purpose - and both are lacking in Greece. The newspaper refers to a series of strikes in February and the habit of the culture to avoid paying taxes. 

Concerns regarding the possible bankruptcy of Greece spread to other Eurozone countries members with large budget deficits like Portugal and Spain. Last week, investors began to sell the securities also of those two Mediterranean countries, and the cost of insuring against Portuguese bankruptcy sharply increased. 

Global markets reflected this trend of European investors to sell securities. In the U.S. Dow Jones closed with a loss of 0.55% to 10,012.2 points, and Nasdaq with a loss of 0.3 percent to 2142.2 points. S&P 500 also closed with a loss - from 0.6 percent, closing with 1066.2 points. Overseas in London the FTSE 100 closed with 2.5 percent loss, and threatened to close with less than 5000 points for the first time in three months. In Japan, Nikkei lost about 1.4 percent and closed at 10,057 points. 

Athens Stock Exchange suffered a small crash by falling nearly 9 percent to 1878 points. The last time the index was below 2.000 points was in April 29, 2009. The bad thing is that even the last sale of securities by the Greek government was successful, it was not enough to ensure the confidence of buyers. This is considered a sign that even if the state is able to gain finances and reduce deficits, attracting investors will be a long and difficult struggle. 

Tags: Stock news Budget deficit Dow Jones Nasdaq Greek economy
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