March 6, 2012 – NEW YORK – Stocks closed sharply lower Tuesday, with the Dow posting its first triple-digit decline in 2012, fueled by fears over a Greek default and amid economic growth concerns. The Dow Jones Industrial Average dropped -203.66 points, or 1.57 percent, to close at 12,759.15, logging its biggest decline since November 23, 2011. The Dow’s recent streak without a triple-digit decline was the longest since 2006. The S&P 500 erased 20.97 points, or 1.54 percent, to end at 1,343.36. The Nasdaq dropped 40.16 points, or 1.36 percent, to finish at 2,910.32. All 10 S&P sectors closed firmly in the red, led by financials and industrials. The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged above 20 for the first time since mid-February. Meanwhile, open interest in the Vix index futures reached new all-time highs on Monday, hitting levels not seen since last June. Global woes have weighed on equities in recent trading sessions. On Monday, stocks ended lower after China cut its 2012 growth target to an 8-year low of 7.5 percent. The focus has since turned back to Greece as investors were jittery over the Greek debt swap deal. The bond swap plays an important role of a second bailout loan for the debt-ridden nation that aims to keep it from defaulting. –CNBC [3] 

Trillion Dollar black hole: Decision day for the Greek debt crisis is drawing near, and insiders are predicting that if things go awry it could cost the world economy $1.3 trillion. Holders of Greek bonds have to decide by this Thursday whether they will trade in their old Greek bonds for new bonds that are worth less. Bond holders have an interest in agreeing to the swap because if it doesn’t work, Greece is likely to default on its debt when it has scheduled payments on March 20. In a confidential memo that has just surfaced, the industry group representing bond holders has said that the consequences of such a default could be $1 trillion in losses. “When combined with the strong likelihood that a disorderly Greek default would lead to the hurried exit of Greece from the Euro Area, this financial shock to the [European Central Bank] could raise significant stability issues about the monetary union,” the International Institute of Finance’s memo said, according to a copy posted on a Greek news website. Even with the potential damage, it is not clear if all the bond holders will sign on, and Greece said it will only go ahead if it gets 75% participation. Many of the bonds are currently held by hedge funds who bought them up on the cheap and who are now disappointed with the level of the cuts that Greece is insisting they take. The IIF put out a statement Monday listing all the bond holders who are willing to take the deal. Bloomberg estimated that they only account for 20% of the total participants needed. Greece’s finance minister told Bloomberg Television this is the only chance bond holders will get. “This is the best offer because this is the only one, the only existing offer,” Evangelos Venizelos said. If they don’t take it, today’s stock market declines may look like small potatoes. –LA Times [4]