Fasten Your Seatbelts! Greek Euro Exit Would Risk Asia Crisis-Style Rout

A Greek exit from the euro could cause contagion comparable to the Asian financial crisis, according to Malaysia’s central bank Governor Zeti Akhtar Aziz, who had first-hand experience of that turmoil.

“The worst-case scenario is what we saw in Asia,” Zeti, 64, said in an interview with Bloomberg Television in Istanbul yesterday. “When one economy collapses, then the market usually moves on to focus on the next one, then there will be a contagion that will affect different countries that probably don’t deserve those kinds of consequences.”

 

European leaders are now openly talking about a possible Greek euro exit after attempts to form a ruling coalition in Athens broke down on May 15. The debt crisis in the region sent Spain’s 10-year bond to a five-month high of 6.5 percent yesterday and Italy’s 10-year bond yield rose to as much as 6 percent, the highest since Jan. 30.

http://www.bloomberg.com/news/2012-05-17/zeti-says-greek-euro-exit-would-have-unimaginable-consequences.html