Greece bond

The market is clearly impacted by the debt problem in Greece. Why? On the surface, Greece is only 2% of European market and most people would dismiss its impact. There are several reasons why it should not be ignored. First, Greece is not alone. Spain, Italy, Portugal and Ireland have similar problems. Second, the increase in the bond yield will depress the balance sheet of Greek banks (just as increase bond yield in U.S. will depress balance sheet in U.S. banks). It will cause downgrade in these banks and its impact will spread to other European banks and globally. Third, it is a challenge for Euro. This is probably the first serious problem for Euro since its inception.