The breakdown of talks between Greece and its bondholders appears to be a nightmare scenario. Standard & Poor's has threatened to declare Greece in technical default, the first for an EU member state since the introduction of the euro in 1999. Meanwhile, the IMF is warned "the euro crisis entered a perilous new phase" and lowered its global growth forecast for 2012.
Despite heightened risk of a 'disorderly' resolution to the Greek debt crisis, the financial markets gave a collective shrug on Tuesday. The Dow was recently down 0.3%, following similarly modest declines in Europe while the euro recovered from its early weakness to push beyond $1.30.
"As all things in the market...bad news is better than no news [and] we need to get through this," says Axel Merk, president and CIO of Merk Investments. "What policymakers have been working on is to stomach the default of a sovereign and Greece is pretty hopeless, no matter whether you call it a technical default or voluntary."Read More »from Greek Bond Talks Break Down, But Markets Shrug It Off