LONDON The Greek crisis, to borrow an expression from social media, has now gone viral.
It is no longer just about the euro zone. It is global, hitting financial markets across the board and threatening the general improvement in the global macroeconomic climate.
Heading into a new week, there is no comfort for investors either from the indecisive British general election, with its accompanying macroeconomic uncertainty.
But it is Greece that is the domino that has started to topple.
Rioting protestors and burning banks on the streets of Athens have clearly grabbed the limelight the over the past week. But from an investor standpoint, they have simply underlined the growing skepticism about whether the European Union can save the euro zone from a Greek default and spreading debt meltdown.
As a result, the year's gains in world stocks have been wiped out and the euro is sitting on double-digit percentage losses for the year.
So the issue facing investors now is whether this crisis -- the Greek word, appropriately, for judgment -- is containable or whether the world is heading toward another financial meltdown akin to the subprime debacle.
"People worry that if Greece is Bear Stearns, Portugal is Lehman and Spain AIG," BNP Paribas said during the past week, a phrase that gained much circulation.
Initially, the impact of Greece's struggle with its debt and the fear of a spread to others such as Portugal and Spain, has mainly been seen in European assets.
Funds tracker EPFR Global, for example, reports that European equity funds had more than $2 billion in net inflows in the week to May 5, the most in a year.
But other assets are now getting pulled in significantly:
-- The U.S. Dow Jones industrial average .DJI plunged as much as 9 percent on Thursday before recovering to end around 3 percent down.
-- MSCI's benchmark emerging markets index .MSCIEF has lost 11 percent since mid-April.
-- The price of crude oil has fallen as much as 14 percent over the past five days, with the Greek crisis putting the brakes on speculators as well as fears for Chinese growth.
-- Commodities, as measured by the broad Reuters Jefferies CRB index .RJCRBTR, have lost more than 5 percent in a week as investors in riskier assets have pulled in their horns.
-- Emerging market sovereign debt yields have blown out around 55 basis points over U.S. Treasuries over the past week.
NO WAY OUT?
The problem for investors is that there is no clear solution to the crisis ahead.
The EU/International Monetary Fund aid plan has been greeted with less than enthusiasm by financial markets and is anyway under threat from legal challenges in Germany.
The riots in Greece are showing the huge task ahead for the Greek government to meet EU demands for fiscal discipline.
Meanwhile, sovereign debt of peripheral EU economies has come under fire and ratings agency Moody's has warned that the rot could spread to the banking systems of Britain, Italy, Ireland, Spain and Portugal.
"It is very difficult to find a near-term equilibrium from a policy and markets positioning perspective," said Andrew Bosomworth, a senior manager for bond fund PIMCO Europe.
"We are faced with how to deal with a state that from all accounts is insolvent."
The extent of the problem for investors cam also be seen in a note from UBS which addressed the question of whether market declines were now offering opportunities.
"The lack of a clear 'end game' for sovereign risk in Europe means that despite recent sharp declines in markets, this is not a buying opportunity," it said.
In effect, leading investors are expecting more volatility in the weeks ahead.
The irony of the crisis is that it is coming at a time when the global economy is looking better, as exemplified by Friday's figures showing U.S. jobs growth.
But it is being overwhelmed by the worries about another financial crisis.
This is particularly the case in emerging markets, where government finances are in relatively good order -- in surplus in many places -- and economies are strengthening.
Poland, for example, is the only EU economy to escape recession last year but the latest week saw investors demanding higher premiums because of its deficit.
A two-year bond auction showed its worst result since last July, with the yield rising to 4.80 percent from 4.54 percent at the previous sale.
Emerging markets, particularly some of those closest to the troubled euro zone, will be in the spotlight during the coming week at the European Bank for Reconstruction and Development annual meeting in Croatia.
The EBRD has already warned that Bulgaria, Romania and Serbia may suffer as a result of the crisis in Greece. It will announce an increase in EBRD shareholders capital to lift investment in the region.