Could a Greek Debt Crisis Destroy the Euro?

That might be in the offing if the Greeks default on their debt.

A Greek bankruptcy thus has serious implications for Europe, and indirectly, for the rest of us. European banks are heavily invested in Greek bonds, and if the country defaults, it's probable that speculators will start eying other euro zone members. Consider Ireland, which has a relatively low debt-to-GDP ratio--but which saw that ratio spike from 25% in 2007 to 43% in 2008. Europe's finance ministers face some tough decisions in the days ahead.

The idea of vulture speculators making bond runs on various weak European countries sounds like a disaster waiting to happen. We saw from our own financial collapse that systemic risk can run through the system like a wildfire. Everyone remembers how much damage Lehman Brothers did to the world economy.

Imagine what would happen if Greece, Spain and Ireland all went bankrupt in a domino effect. The Euro would be shattered by such a scenario. Too bad Europe doesn't have a system of balanced budgets in place like many US states do. That may have prevented what could be the next great world economic smackdown. Well, I guess dollar bulls would be happy as capital fled back into our currency.