Strap in folks, the slow motion train wreck we have been watching since 2006 is picking up speed.  The DOW dropped 213 points yesterday in response to Greece and Portugal’s credit rating changes and Goldman Sachs all over the news in front of Congress.  The dominoes of teetering governments that Basil, the IMF, the WB, The Fed, and the other usual suspects have been trying to keep upright are now gently rocking.  So far, the only person who appears to have their head screwed on straight is Angela Merkel, Germany’s Chancellor.

Fears of Greek debt default hit markets

(Reuters) – Fears that a planned rescue of Greece could stall and extend the financial crisis to other euro zone countries hit European markets on Wednesday as investors worried that Athens may default on its debt.

A day after rating agency Standard and Poor’s slashed Greek debt to junk status, the premium investors demand to hold Greek government bonds jumped to its highest in 14 years.

S&P also downgraded Portugal, raising concerns the crisis may spread to other indebted states on the eurozone fringes. European shares hit a five-week low in early trade, after recording their biggest one-day fall in five months on Tuesday.

“The chances of a default by the Greek government are increasing not by the day but by the hour. If the IMF and European governments don’t come up with something quickly, then I see the market going down further quite rapidly,” said Koen De Leus, economist at KBC Securities.

European Central Bank Executive Board member Juergen Stark said governments must ensure the financial market troubles do not develop into a full blown sovereign debt crisis.

“The current trend in fiscal policies is simply not sustainable. … The onus is now on governments to ensure that the crisis that initially affected the financial sector, and subsequently the real economy, does not lead to a full-blown sovereign debt crisis,” Stark said.

“Averting it will require very ambitious and credible fiscal consolidation efforts. In fact, substantially stronger consolidation efforts than those conceived so far.”

European Union President Herman Van Rompuy said he would convene a summit of euro zone countries around May 10 and insisted there would be no restructuring of Greek debt.

“Negotiations are going on, they are well on track, and no question about restructuring of the debt,” he told a news conference in Tokyo.

Bailout talks between Greece, European authorities and the International Monetary Fund began in Athens last week, after Greece asked for as much as 45 billion euros in emergency loans from euro zone governments and the IMF this year.

Losses Accelerate in European Markets

European stocks extended the previous session’s hefty losses on Wednesday and the euro hit a fresh one-year low against the dollar as renewed fears about Greek debt contagion continued to rattle investors.

After a modest recovery in early European trading, the euro fell to its lowest level against the dollar since April 2009, at $1.3142, as fears intensified that the debt crisis is no longer contained to Greece.

In Asia, the renewed concerns about Greece gripped markets. Japan’s Nikkei 225 was down 2.6% and South Korea’s Kospi Composite was off 0.9%. Hong Kong’s Hang Seng Index fell 1.5%, while the Shanghai Composite was 0.2% lower. In the foreign exchanges, the euro was trading at $1.3183 at 0950 GMT, up from $1.3175 in late New York trading Tuesday, while the dollar was at Â¥93.72, up from Â¥93.27.

Greek Bonds Still Under Pressure

LONDON—Greek bonds buckled Wednesday as investors flocked to safe havens amid mounting fears that other euro-zone countries could suffer a fate similar to Greece.

Markets were already under pressure after Standard & Poor’s Corp. downgraded the debt of both Portugal and Greece. That double-whammy took Greece down to junk status and reinvigorates fears that other indebted euro-zone states like Portugal, Spain and Italy could face the same problems as Greece, which has already requested international financial assistance.

Do not forget about Ireland:

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