What's Happening in Greece?

Greece can bring down the European Union! Well maybe that's an exaggeration, but in a report by a Moody's analyst a mention of "slow death" for Portugal and Greece was made. Although Greece isn't the powerhouse it was thousands of years ago, its currency is the euro and they are one of 16 members of the European Union. A crisis in either Greece or Portugal can have a scathing ripple effect across larger Eurozone members which would eventually hurt the "recovering" global economy. Of course, with the growth in China and USA out of the abyss, Europe is less threatening than it appears to be.

PIGS, the contemptuous name for Portugal/Italy/Greece/Spain, are under pressure as the rating agencies are hitting them with negative outlooks. The deficits being run in these countries are being supported by low interest rates, but as soon as institutional investors pull the plug on cheap financing, things could start to crumble. There are ways to protect portfolios from this, one of them--and the most direct way--is to short the currency. Another is to buy put options on ETFs that have exposure to these countries.