World markets fell today after Greek bonds were downgraded to junk status on Tuesday. The most dramatic stock market decline was in Portugal, where the PSI 20 index fell almost 6 percent. Standard & Poors downgraded Portuguese bonds two notches yesterday.
Investors are worried that Greek's financial crisis may spill over to Europe. “The situation is deteriorating rapidly, and it’s not clear who’s in a position to stop the Greeks from going into a default situation,” Edward Yardeni, president of the economic consulting firm, Yardeni Research, told The New York Times. “That creates a spillover effect.”
Greece has requested €45 billion, or $59.8 billion, from the European Union to help it pay off its debt by May 19. Greece had asked Europe's biggest economy, Germany, for the largest loan--€8.4 billion. After a meeting of the heads of the International Monetary Fund and the European Central Bank, Germany's Chancellor Angela Merkel said Germany would make its contribution, but only if Greece agrees to new austerity measures in the next few days.
UPDATE SINCE THIS STORY WAS FIRST POSTED: This story was updated to include Merkel's remarks after today's meeting with the IMF.