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“Kyodo Securities”: The Greek debt crisis spreads to Spain and Portugal.

“Kyodo Securities”: Speculators appear to be testing the resolve of the European Union to defend the single currency.

The European Union has so far refused to mount a bailout for Greece whose public sector deficit now stands at over 140% of gross domestic product. Germany, the largest economy in the euro zone, has indicated that it is reluctant to mount a bailout for Greece or other beleaguered nations in the European Union.

“Kyodo Securities” analysts believe that 2010 is set to the year when the attention shifts from individual organizations going bankrupt to entire sovereign nations. This, they believe, is likely to prompt a currency crisis.

Despite the precarious nature of the economy in the United States, some investors still appear to perceive the US dollar as a safe haven said one of the “Kyodo Securities” sources. This, he suggested, was likely to be exposed as the greatest fallacy in the financial markets.

The European Union, despite its public endorsement of Greece’s planned austerity measures, is likely to have to come to the aid of those member nations whose profligacy is affecting the credibility of the single currency.

Spain and Portugal have recently seen spreads on credit default swaps to insure against default on their sovereign debt spike sharply as speculators bet that EU officials will inevitably ride to the rescue with a bailout rather than sacrifice the integrity of the euro.

“Kyodo Securities” analysts continue to maintain that gold remains the only true hedge against a currency crisis.