With Greece Already Infected, Will Italy Now Catch the Contagion?

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Right when it seemed like Europe was making some progress with EFSF expansion and a bank recapitalization plan, Greece’s woes have soured the mood once more.

With the referendum proposal and subsequent reversal this week, the political upheaval in Greece has reached a fever pitch as Papandreou might step down, creating further uncertainty.  EU leaders have already expressed their discontent, demanding that Greece break away from the Euro currency.

As the possibility of a disorderly Greek default comes into the foreground, our sights are also on Italy, the next in line so to speak. Although default and Italy haven’t been mentioned in the same sentence, the country’s escalating borrowing costs in tandem with its debt load, which is at 120 percent of GDP.

This week’s video gives a breakdown of how a negative event in Greece may spread to and impact Italy. To say the least, next week could be a rocky ride for equity ETFs if the downside becomes apparent.

http://www.bloomberg.com/video/79465584/

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