The Greek newspaper Eleftherotypia, one of the most widely circulated newspapers in Greece, quotes a senior European Commission official as saying Athens realized that it could not avoid restructuring its debt, despite repeated official denials by Greek, EU and IMF officials. If true, that’s a serious event with a big fat tail in the making.

From his side, China’s central bank (PBOC) Governor Zhou Xiaochuan said in a speech at the Tsinghua University in Beijing his country must reduce its foreign exchange reserves as they are beyond the level it needs. China's foreign exchange reserves rose 24.4 percent year-on-year to $3.044 trillion by the end of March. According to data released by the People's Bank of China (PBOC) on April 14, reserves exceeded $2 trillion for the first time in June 2009 or 21 months ago.

Economists attribute much of the increase in reserves to capital inflows betting on appreciation of the renminbi, or yuan (CNY). Nevertheless, investors shouldn’t overlook that “warning” fact that it was only last week Fitch Ratings lowered its outlook on China's “long-term local currency” to negative from stable in consideration of the “high likelihood of a significant deterioration” in banks' asset quality.

It was the first time in 12 years that China's debt rating has received a downgrade. Keep in mind, Moody's Investors Service also lowered its outlook for the Chinese property sector to negative from stable.

Commenting on local government financial vehicles (LGFVs), Governor Zhou said “some” local governments had (and are still!) raising funds via their project enterprises during a lending boom amid the global financial crisis in 2008 and 2009, and that some banks haven't conducted due diligence checks.

Interestingly, he said Chinese LGFVs are actually a disguised form of municipal bonds. Letting local authorities sell bonds, whose repayment could be partly supported by property tax revenues, is actually not permitted by law. It will be interesting to see how they are going to fix this. I would advise you to put it on your watch-list.

In Japan, Japanese Finance Minister Yoshihiko Noda said at a news conference after a Cabinet meeting U.S. government bonds remain an attractive financial product for the Japanese government even after the downgrading of their outlook by U.S. rating agency Standard & Poor's.

“Basically, I still believe U.S. government bonds are attractive products.”

All that taken into account, Germany and others have to prepare for a default of Greece, Portugal and Ireland, while Spain remains, for now at least, out of reach. Maybe we are on our way to a combination of default, bailout, and reform.

The eurozone needs some kind of a miracle that would end the still brewing banking crisis in euroland, help the “sick” countries regain economic health, and prevent the re-occurrence of such a crisis in the future. I don’t know if it’s realistic to hope for that.

Because of all that, I have my doubts and can’t be positive on the euro in the medium term. Longer term, nobody knows as doubts remain on how the euro structure will be within a few years. Of course, markets can remain irrational longer than you can remain solvent.

I still prefer gold, oil, the Norwegian kroner and Swedish kronor, the Swiss franc, especially against the euro and the Canadian dollar for a medium to longer term time span.