The Dow Jones Industrial Average dropped almost 1,000 points today before recovering much of the ground it had lost. The wild fluctuations, which may have been caused by automated, computerized trading, are likely also founded on very real human fears over a looming European debt crisis. If you need a better understanding of the European debt crisis, of which Greece is currently the focal point, we wrote about that recently.
In our April 30 article, Greece Defaults, So What?, we note, among other things, “How can Greece have such a big effect? For one thing, much of the Greek debt is owned by investors outside of the country. So, if Greece fails to make its payments, investors around the world will be hurt. Of course, Greece uses the Euro, linking its fortunes to the rest of Europe’s.”
Guess who else has a lot of debt? That’s right, the good ol’ U.S.A. Could we default on our debt? And if we did, what would happen? Well, the answers are “anything's possible” and “very bad things.”
Want the full coverage of which stocks sparked the drop and what investors can expect tomorrow when the market reopens? Check out The Street.com’s coverage.