(HawaiiNewsNow) - We've all been so fixated on the debt ceiling drama in Washington that we took our eyes off the ball in Europe. So here's the latest.
European countries have to settle their own debt crisis at an emergency summit this week. If they don't settle the Greek debt crisis, which effectively means lending Greece yet more money, Greece could default.
Traders think that will trigger a spillover into Italy and Spain, although Italy enacted austerity measures Friday.
Greek Prime Minister George Papandreou in a Sunday interview said, "it's time for Europe to wake up." The last Greek bailout was last year, 160 billion dollars. The next one should be about the same size.
An interesting point for us outsiders. Bailing out Greece really means bailing out French and German banks that lent to Greece. Like American banks, they're legally required to keep a certain percentage of their paper wealth in actual cash they can get at. The more bad debt they have, the more they have to keep more cash on hand. If Greece defaults, French and German banks have to tie up more money instead of lending it.