Scary bad if you believe these three articles:
!. From the Telegraph – Debt crisis: tensions mount as Angela Merkel attacks French economy:
Mrs Merkel warned the policies of the new Socialist president could destroy the eurozone by bringing the sovereign debt crisis to France itself.
The bleak assessment came on the eve of an important weekend that will see elections in Greece and France and a key G20 meeting of world leaders in Mexico.
“Europe must discuss the growing differences in economic strength between France and Germany,” she said.
Tensions are running so high that Jean-Marc Ayrault, the French prime minister, was forced to deny that Paris had broken off the Franco-German partnership, following Berlin anger at a Franco-Italian summit in Rome on Thursday.
2. From Bloomberg Businessweek – Fitch Downgrades Egypt on Political Uncertainty as Vote Looms:
Egypt, which is still struggling with the aftermath of popular unrest that last year toppled President Hosni Mubarak, had its long-term foreign currency issuer default ratings downgraded by Fitch Ratings on the eve of a run-off vote to choose a new head of state.
“The downgrade and negative outlook reflect increased uncertainties surrounding the political transition following yesterday’s ruling by the Supreme Constitutional Court to annul parliamentary elections and dissolve parliament,” Richard Fox, head of Fitch’s Middle East and Africa sovereign ratings, said in an e-mailed statement today. The long-term foreign currency rating was cut to B+ from BB-. The outlook for this and the long-term local currency rating were negative, the company said.
How shock washes will hit the US if Greece drops euro: Bankers, governments and investors are preparing for Greece to stop using the euro as its currency, a move that could spread turmoil throughout the global financial system.
The worst case envisions governments defaulting on their debts, a run on European banks and a worldwide credit crunch reminiscent of the financial crisis in the fall of 2008.
A Greek election on Sunday will determine whether it happens. Syriza, a party opposed to the restrictions placed on Greece in exchange for a bailout from European neighbors, could do well.
If Syriza gains power and rejects the terms of the bailout, Greece could lose its lifeline, default on its debt and decide that it must print its own currency, the drachma, to stay afloat.
No one is sure how that would work because there is no mechanism in the European Union charter for a country’s leaving the euro. In the meantime, banks and investors have sketched out the ripple effects.
They think the path of a full-blown crisis would start in Greece, quickly move to the rest of Europe and then hit the U.S. Stocks and oil would plunge, the euro would sink against the U.S. dollar, and big banks would suffer losses on complex trades.
But wait – there’s more:
A Global Perfect Storm – Nouriel Roubini, Project Syndicate
How Spain Got Worse in Less Than a Week – Lisa Abend, Time
A Global Perfect storm begins: Dark, lowering financial and economic clouds are, it seems, rolling in from every direction: the eurozone, the United States, China, and elsewhere. Indeed, the global economy in 2013 could be a very difficult environment in which to find shelter.
That’s about the size of it. Be careful what you wish for, Mitt Romney.