Greece, Europe Debt Crisis | featured news

A collapse of the euro could derail America’s fragile recovery and doom Mr. Obama’s re-election hopes. He may be running out of time to sway the German chancellor.

World stock markets rebounded Friday on anticipation that central banks will act to keep any political instability in Greece following weekend elections from destabilizing the global economy.

Greece looks close to bolting from the European Union with national elections this weekend. Spain’s banks were just bailed out, and Italy might be next. And, closer to home, Wall Street is still reeling about May’s crummy jobs report. So you’d think U.S. stocks would be tanking? Nope. Welcome to the bad-news rally: The Dow Jones industrial average shot up more than 160 points on Tuesday.

European finance officials have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing euro zone capital controls as a worst-case scenario should Athens decide to leave the euro.

Greece's economy shrank further in the first three months of 2012, shriveling at a yearly rate of 6.5 percent against a backdrop of painful wage cuts, tax hikes and record unemployment.

Ireland was poised to announce a "yes" vote to a European budget discipline treaty on Friday, but the referendum result brings little respite to a euro zone tormented by doubts over Greece's future in the currency bloc and Spain's wobbly banks.

Greek stock markets rebounded strongly on Monday from a 22-year low on hopes a pro-bailout party will win crucial national elections next month, which would avoid a catastrophic rift with international creditors and keep the struggling country within the euro currency union....

Recall the reasons for the current euro panic: Greece is getting bailed out and, in return, it’s supposed to cut spending and raise taxes even further. But Greek voters don’t enjoy this austerity and are rebelling against politicians who agree to the deal. So Germany’s now hinting that Greece might get booted from the euro. Disaster, right?

Political leaders in Greece need to show the resolve to stay in the euro zone, which will require Athens to stick to the terms of its rescue package, International Monetary Fund Managing Director Christine Lagarde said on Thursday.