“The Dow Jones Industrial Average posted its biggest intraday loss since the market crash of 1987, (as) the euro slid to a 14-month low and yields on Greek, Spanish and Italian bonds surged on concern European leaders aren’t doing enough to stem the region’s debt crisis.”

— News flash from Bloomberg.com at mid-afternoon May 6
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The Greek debt crisis is roiling world financial markets, with many knowledgeable analysts saying that concerns could spread to other  European countries.

To that end, the Dow dropped 993 points at one point on May 6, but recovered somewhat before the market closed. That level of volatility has not been seen in 23 years in the United States.

This is ominous for the U.S., which has its biggest-spending administration in history, and is on an unsustainable fiscal path.
As Nouriel Roubini of Roubini Global Economics recently noted, the situation in Greece represents “the first sovereign debt crisis in living memory in a high-income country, and in the eurozone no less.

“Even more telling than a shift of focus from emerging markets crises is a widening divide in the views of the major players, and little appreciation of the lessons from modern sovereign debt crises.”

We think Roubini is right on target — and the defaults and rioting will spread. Ominously, Marc Faber even is predicting that China might default within nine to 12 months.