Tags: Markets | Vortex | European | Uncertainty

Economist Weinberg: Global Markets Face 'Vortex' of European Uncertainty

By    |   Wednesday, 16 May 2012 11:01 AM

Global financial markets face a “vortex” of uncertainty because of the eurozone and the high risk of Greece defaulting on its debts, Carl Weinberg, the chief economist at High Frequency Economics, told CNBC.

Weinberg and his colleagues believe there's a possibility that Greece could exit the currency as soon as this year and that we could see dissolution of the currency in its current form.

The team at Capital Economics in London has been very negative on Greece and the chance of the euro surviving in its current form for some time, CNBC reports.

EU leaders have been trying to put patches on Greece's financial problems for a while but confidence in their ability to continue doing so is fading, especially since the nation is without a government. Furthermore, the recent election suggests that when a government is formed it is likely to be one that is opposed to austerity as the majority of Greeks themselves appears to be.

That prospect has shaken faith in Greece's ability to remain in the single currency union and to stay solvent, sending the euro and the European shares lower and raising the bond yields that reflect the risk that other European countries will be hurt, Reuters reports.

“Events in Greece have underlined that the recent debt restructuring and bailout package have not bought an end to that country's huge economic and fiscal difficulties, Jonathan Loynes, chief European economist at Capital Economics, told CNBC.

A growing number of Greek citizens appear to be among those losing faith in the nation's ability to stay in the euro.

Greeks are withdrawing euros from banks, apparently afraid of the prospect of rapid devaluation if the country leaves the European single currency, Reuters reports.

“We remain wary of the potential for a hard default, literally at any time and without warning, Weinberg stated in a market note, CNBC reported.

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