Investors fear Greek default inevitable

The Euro dropped against the dollar and Yen on Monday as traders became increasingly concerned with policymakers' approaches to the eurozone debt crisis.

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LONDON, ENGLAND (Catholic Online) - Investors are shying away from long-term investments in Europe as officials give mixed signals about a new plan to save Greece from default. 

At this time, European officials are looking at obtaining more money than what the already-planned 440 billion euro rescue fund has, but not all of the European countries are supporting the idea. French officials have been particularly vocal in opposing more money for Greece. 

Nothing officially transpired at the latest IMF and Group of 20 meetings which took place over the weekend. However, most seem to agree that a larger aid package, recapitalization of banks, and a plan for an "orderly default" of Greece were needed.

Kathy Lien, director of global research and analysis at GFT in New Jersey said, "Everyone is starting to realize that a Greek default is not only possible but also probable, and given the impact it would have on banks in Europe and financial markets around the world, it is time to stop playing around with the BB guns and bring out the bazookas." 

Votes on the rescue fund are expected this week in Finland and Germany, two countries where the proposed Greek bailout has been unpopular. If the votes pass, then the next round of aid for Greece will be released and it is expected to boost the euro. The due date for the aid is October 3. 

However, according to Lien, Germany does not believe that the decision will come so quickly. And if Greece does not receive the promised aid by mid October, the country will go into default. 

Investors continue to watch the eurozone policymakers as they scramble to work out a deal to save the Greek economy.

However, most now believe that a default is a matter of when and no longer if. If that is so, then the question becomes one of how to manage the default to prevent or minimize its spread to other economies. Something that may prove nearly impossible to do in a highly globalized market. 

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