A demonstrator holds a Greek flag on September 10, 2011 during a protest in Thessaloniki.
A demonstrator holds a Greek flag on September 10, 2011 during a protest in Thessaloniki. - 
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Jeremy Hobson: Global stock markets are way down this morning because of new fears over the stability of the Eurozone. And the worries can be traced to Athens, where a national default is looking like more of a possibility. There's reluctance from Germany to step in again with another bailout of Greece. And the health of big European banks is in question because of their exposure to Greek debt.

Let's bring in Marketplace's Stephen Beard, at the European desk in London with more. Stephen, you know this Greek debt crisis seems to go in waves -- why is there so much fear out there today?

Stephen Beard: Well, fears are growing that Greece will not, cannot implement the budget cuts and the tax increases that they've agreed. Last week, IMF and European officials in Athens to check up on things left complaining the Greeks appear to be backsliding.

Hobson: And usually when this European debt crisis flares up, the stocks tank -- which as I said, they are doing. But I also noticed that the euro currency has fallen to its lowest level against some other currencies since 2001. Why is the euro dropping so much today?

Beard: Well, because this does have the potential to rock the single currency, the euro, to its foundations. There's now quite open talk about Greece defaulting and leaving the euro zone, raising questions about other countries that use the euro, too.

Here's Daniel Gros of the Center for European Policy Studies in Brussels.

Daniel Gros: What if financial markets think, "Hmmm, if that can happen to Greece, the next day it will happen to Portugal, and then to Spain and Italy," then of course all hell breaks loose.

If you have four or five countries of the 17 countries that use the euro defaulting, that really could tear the euro apart.

Hobson: And if that were to happen, are we prepared, Stephen? I mean we've certainly had the time to plan for such an event, but is the world prepared for this?

Beard: No. This is absolutely the worst case scenario -- it could plunge the global economy back into recession. Daniel Gros doesn't believe it's going to happen, however. He thinks the German people will finally agree to stand financially behind the weaker euro zone countries, because, according to a recent study, bailing out those weak economies would cost Germans $1,500 a head but picking up the pieces if the euro collapses would cost 6 times as much.

Hobson: Marketplace's Stephen Beard in London, thank you Stephen.

Beard: OK Jeremy.