Warning of Greek crisis spreading across EU | WHAT REALLY HAPPENED


Warning of Greek crisis spreading across EU

THE Greek debt crisis has spread to Spain and Portugal in a dangerous escalation as global markets test whether Europe is willing to shore up monetary union with muscle rather than mere words.

Julian Callow from Barclays Capital said the European Union might need to invoke emergency treaty powers to halt the contagion by issuing an EU guarantee for Greek debt. "If not contained, this could result in a 'Lehman-style' tsunami spreading across much of the EU," he said.

Credit default swaps measuring bankruptcy risk on Portuguese debt surged 28 basis points on Thursday to a record 222 on reports that Jose Socrates was about to resign as prime minister after failing to secure enough votes in parliament to carry out austerity measures.

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