Why the Greek Crisis has the Euros Spooked

In many of the articles I've been reading on the Greek fiscal crisis, they talk about contagion. I finally understood it today. Yesterday, investors came to the conclusion that the Greek government is probably not going to pay them back. No one wanted to be holding Greek debt, so rates on their 2-year bonds skyrocketed to 26%. Government debt usually pays trivial interest rates because it's so secure. Well, the Eurosocialist fantasy world is starting to implode and it's becoming clear that their debt isn't secure at all. And if Greece can't pay theirs, then maybe Portugal can't pay theirs. And if Portugal can't pay, then Spain, Italy and Ireland might not be able to pay, either. And if those guys are going to stiff you, then the French and Germans might not be far behind ...

This is what happens when you carry massive loads of debt that you have to regularly refinance. If these countries ever ran surpluses and payed some of that debt off, investors would be far less likely to be frightened. To do that, however, you'd have to cultivate profitable businesses and as we all know, profit is greedy and evil.

By the way, if you think this one's bad, just wait for Japan. Their debt is almost twice as bad as Greece and their economy is too large for anyone to bail them out. It's not a question of "if" with Japan, it's a question of "when" and when might be soon. They just elected another leftist government that is blowing money in an Obama-sized way.