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Global stock markets tumbled after Greece's debt was downgraded to "junk" by rating agency Standard & Poor's over concerns that the country may default.

It makes the struggling nation the first eurozone member to have its debt downgraded to junk level.

Portugal's debt was also lowered on fears of "contagion", adding to the markets' rout and a fall in the euro.

Germany immediately said it would not "let Greece fall", and there were signs that an aid package could be increased.

Greece wants 40bn euros (£34bn) from eurozone governments and the International Monetary Fund (IMF) to shore up its finances.

But there are fears it will not meet conditions needed to access the funds it needs to make looming debt repayments.

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Down the toilet... unless... see story unfolding in the toons above...

By NELSON D. SCHWARTZ and ERIC DASH

After a brief respite following the announcement last week of a nearly $1 trillion bailout plan for Europe, fear in the financial markets is building again, this time over worries that the Continent’s biggest banks face strains that will hobble European economies.

In a sign of the depth of the anxiety, the euro fell Friday to its lowest level since the depth of the financial crisis, as investors abandoned the currency as well as stocks in favor of gold and other assets seen as offering more safety.

In trading early Monday morning, the euro declined again, managing at one time to reach a four-year low relative to the dollar.

The president of the European Central Bank, Jean-Claude Trichet, in an interview published Saturday, warned that Europe was facing “severe tensions” and that the markets were fragile.

For Europe’s banks, the problems are twofold. Short-term borrowing costs are rising, which could lead institutions to cut back on new loans and call in old ones, crimping economic growth.

At the same time, seemingly safe institutions in more solid economies like France and Germany hold vast amounts of bonds from their more shaky neighbors, like Spain, Portugal and Greece.

Investors fear that with many governments groaning under the weight of huge deficits, the debt of weaker nations that use the euro currency will have to be restructured, deeply lowering the value of their bonds. That would hit European financial institutions hard, and may ricochet through the global banking system.

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There's little that shouts "seriously rich" as much as a little island in the sun to call your own. For Sir Richard Branson it is Neckar in the Caribbean, the billionaire Barclay brothers prefer Brecqhou in the Channel Islands, while Aristotle Onassis married Jackie Kennedy on Skorpios, his Greek hideway.

Now Greece is making it easier for the rich and famous to fulfill their dreams by preparing to sell, or offering long-term leases on, some of its 6,000 sunkissed islands in a desperate attempt to repay its mountainous debts.

The Guardian has learned that an area in Mykonos, one of Greece's top tourist destinations, is one of the sites for sale. The area is one-third owned by the government, which is looking for a buyer willing to inject capital and develop a luxury tourism complex, according to a source close to the negotiations.

Potential investorsalso looking at property on the island of Rhodes, are mostly Russian and Chinese. Investors in both countries are looking for a little bit of the Mediterranean as holiday destinations for their increasingly affluent populations. Roman Abramovich, the billionaire owner of Chelsea football club, is among those understood to be interested, although a spokesman denied he was about to invest.

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China has offered its support to eurozone countries to help them through the debt crisis that has gripped the region.

"We are ready to support the eurozone to overcome the financial crisis and realise economic recovery," said foreign ministry spokeswoman Jiang Yu.

She added that the eurozone would become "a major market" for China's foreign exchange investments.

http://www.bbc.co.uk/news/business-12065731

Greece’s financial and political crisis, compounded by new fears about the pace of the United States economic recovery, sent financial markets reeling on Wednesday.

Thousands took to the streets in Athens to protest austerity measures, and Prime Minister George Papandreou said he would reshuffle his cabinet and request a vote of confidence in Parliament. At stake is the prospect of a new bailout plan for the debt-ridden country.

Anxious investors feared the situation could spin out of control, igniting a series of crises in other heavily indebted euro zone countries, like Portugal, Ireland and Spain. That, in turn, could threaten Europe’s banks and even reach into the United States financial system.

“We are pretty much giving back everything we got yesterday and more,” said Lawrence R. Creatura, a portfolio manager at Federated Investors, noting the rise in the main American indexes of more than 1 percent Tuesday. “Today the market just can’t escape the undertow of deteriorating economic data and political events.”

After having lost more than 200 points earlier Wednesday, the Dow Jones industrial average closed down 178.84 points, or 1.5 percent, to 11,897.27. The markets rallied earlier this year on confidence about the economic recovery, and at one point the Dow was poised to break through the 13,000 mark. But stocks have been falling week after week on a drumbeat of dismal economic news from soft job creation to falling housing prices.

The market has surrendered almost all of its gains for this year, falling 7 percent since its peak at the end of April. It may be nearing what is known as a market correction, a sort of miniature bear market characterized by a 10 percent decline in a short period of time.

Greece needs to pass a new round of austerity measures by the end of the month in return for new loans from the International Monetary Fund and the European Union.

http://www.nytimes.com/2011/06/16/business/16markets.html?hp=&pagewanted=print

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France's Christine Lagarde has been named to be the first ever female chief of the International Monetary Fund (IMF).

The French finance minister is widely respected for her leadership during Europe's financial crisis over the past three years.

She was chosen to replace fellow French politician Dominique Strauss-Kahn, who resigned abruptly in May after being arrested in New York for the alleged sexual assault of a hotel maid.

Ms Lagarde was up against Mexico's Agustin Carstens. An IMF statement said both candidates "were well qualified".

The announcement of Ms Lagarde's appointment came soon after she received the backing of the US and Russia.

She will find herself immediately immersed in efforts by the IMF and European Union to head off a Greek default that could touch off an international crisis.

"The executive board, after considering all relevant information on the candidacies, proceeded to select Ms Lagarde by consensus," the IMF said in a statement.

French president Nicolas Sarkozy called the news "a victory for France," while Ms Lagarde said she was "deeply honoured."

http://www.abc.net.au/news/stories/2011/06/29/3256063.htm?section=justin

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Did he really say that, the little Napoleon? What a chauvinist idiot...

The first thing any insolvent private person is forced to do is relinquish the family silver. But other rules seem to apply to governments. Whether they've been living above their means for a few years or for decades, certain countries hold on tight to their assets, declare themselves unable to pay back their debts and turn to other countries for help.

The European Union has seen many an example of this. Right now, Greece is negotiating with the troika of the E.U., the European Central Bank (ECB) and the International Monetary Fund (IMF) for a new rescue package while Athens sits on an impressive 114-ton stash of gold, about what four large, fully loaded trucks could carry.

The gleaming bars in the vaults of the Greek central bank are worth $5.8 billion. If Athens were to sell that gold, the Greek state would theoretically be able to meet at least part of the debt payments due soon without any outside help.

Read more: http://www.time.com/time/world/article/0,8599,2080813,00.html#ixzz1R80CZ0wr

The organisers of a Gaza aid flotilla banned from leaving a Greek port say they are determined to continue their campaign.

The activists say Israel has pressured the Greek government to prevent their mission.

The Greek foreign ministry denies this. But the incident highlights shifting regional relations.

The relationship between Greece and Israel, reflected in official figures, show a 50 per cent increase in Israeli visitors over the past year.

Meanwhile. the number of Israeli tourists to neighboring Turkey has dropped by nearly 90 per cent, one relationship weakening, as the other grows stronger.

It is a relationship based on mutual need. In its financial meltdown Greece has been urgently searching for new markets, and a different source of its economic lifeblood - tourism.

http://english.aljazeera.net/video/europe/2011/07/20117317752336552.html

THE warning was clear: Greece was spiraling out of control.

But the alarm, sounded in mid-2009, in a draft report from the International Monetary Fund, never reached the outside world.

Greek officials saw the draft and complained to the I.M.F. So the final report, while critical, played down the risks that Athens might one day default, with disastrous consequences for all of Europe.

http://www.nytimes.com/2011/11/06/business/global/europes-two-years-of-denials-trapped-greece.html?_r=1&hp

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PRESSURE on Greece's recession-stricken economy has intensified after international debt inspectors admitted an additional €15 billion ($18.4 billion) would be needed to fill a newly discovered black hole in the country's finances.

On a day when Ireland's government reduced its growth forecast and Madrid told Spanish banks to raise an extra €50 billion to cover toxic assets, Brussels officials said European countries and state-owned banks would be asked for contributions to help Athens out of its fiscal troubles.

Read more: http://www.smh.com.au/world/brussels-discovers-a-new-black-hole-in-greek-finances-20120203-1qxin.html#ixzz1lMh9SwDo

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