The Greek debt issue, for example, is such a threat because if that country ever defaulted, it might cause some bank that's 'too big to fail' to actually fail.
Sentiment: NEGATIVE
Well what would happen is that if Greece defaulted and couldn't pay its debts, all the Greek bonds that are held in other banking systems across Western Europe would suddenly have no value. You could as a knock-on effect create a banking crisis in Western Europe.
Greece could default on its debts and even exit currency bloc if it cannot deliver reforms.
There was a real fear that a euro-zone bank might fail, that we'd have a sovereign debt problem in one of the larger European economies. That's dissipated, thanks largely to the action of the European Central Bank.
So you know, everyone points out Greece's default record, but the history of a lot of sovereign nations is not a good one when it comes to lending them money.
Greece's debts are all denominated in euros, but it isn't clear who holds how much of those debts. For that reason, the consequences of a national bankruptcy would be incalculable. Greece is just as systemically important as a major bank.
The World Bank is now the biggest culprit in the debt crisis.
Blaming speculators as a response to financial crisis goes back at least to the Greeks. It's almost always the wrong response.
I certainly don't want our nation to go into default, but at the same time, I'm very concerned about our ongoing debt problem.
Greece will not manage to get back on its feet without restructuring its debt. There is no way around it. The country's creditors will have to reduce a portion of its debts by extending maturity dates, lowering interest rates or giving them what's called a 'haircut' in financial jargon.
The failure of one regional bank, assuming it is following a traditional model, will not threaten the entire system.