FRANKFURT, Germany (AP) — Economists say a Greek debt restructuring would send shock waves through stock and money markets, European banks and possibly entire economies.
Greek banks could go bust, overwhelming the government’s ability to bail them out, and lenders in France, Germany and elsewhere in Europe could suffer losses they can ill afford.
The resulting market turmoil could strain the European’ Union’s backstop fund, pushing European leaders to drum up yet more taxpayer financing, with voters already annoyed at backstopping other people’s failed governments.
A European Central Bank official warned Thursday that leaders should be ready to double the bailout fund to euro1.5 billion ($161 billion) if Greece winds up being ruled in default.
