The Eurozone can handle a Greek crash/exit. The Eurozone can handle a Spanish crash as well. However, when the crisis hits Italy, you can count the days (maybe even hours) before it collapses the US economy.
The euro zone is grappling with another dangerous phase of the financial crisis. This past Monday, Moody’s lowered the outlook on Germany‘s triple-A credit rating from stable to negative. On Tuesday, EU officials said Greece is unlikely to meet its obligations and will require further debt restructuring. What’s more, markets are increasingly wary of Italy’s fiscal situation.
Now, All Eyes On Spain
Yet it is Spain, Europe’s fourth-largest economy, that remains the focal point of the European debt crisis again this week. Interest rates on 10-year bond yields alarmingly have risen again above 7 percent. There is widespread concern that the country may require a full bailout. This is a scenario that the euro zone appears ill-equipped to handle.
Not Just Another Spanish Crisis
It must be remembered that this is not merely a Spanish crisis, nor is Spain another Greece. Just three years ago, the Spanish banking sector had received wide praise. During the darkest days of the global financial crisis, the Spanish banking sector was considered among the most solid of any rich country. So much so that in August 2009 the FDIC approved the sale of Guaranty Bank of Austin, Texas (the 12th largest bank failure in U.S. history) to BBVA Compas – the U.S. arm of Spain’s Banco Bilbao Vizcaya Argentaria SA (BBVA).
Full article: Spain: The Next Wave Of The Financial Crisis Arrives (International Business Times)