How far will Greece's problems spread?

So just to follow up on our last post about debt problems in Greece and the EU, I'm hearing that some people are having a hard time making sense of this crisis and what it means for the whole of Europe.

To that end, I've decided to highlight a few helpful articles that will further our understanding of these sovereign risk issues.

We're seeing a growing worry that problems in Greece, UK, Spain, et. al, will spread throughout the eurozone and signal problems for other developed nations as well. Are these fears justified? Let's take a quick look and see what we find.

First off, The Economist reported yesterday that the EU summit on Greece yielded only "vague promises of solidarity" and no concrete plans for how a bailout of Greece by larger EU nations might come about.

Here's an opening excerpt from that piece:

"“PRETTY catastrophic”. That was the verdict of a depressed-looking diplomat, at the end of a Brussels summit on Thursday February 11th that saw European Union leaders issue a ringing, but alarmingly vague, pledge of “determined and co-ordinated action” to preserve the euro zone from the risk of a Greek sovereign default.

The vagueness of the bail-out promise was no mystery. After years of footing the bills for successive Euro-crises, Germany is in a truculent mood. Of the 16 countries that share the single currency, most came to Brussels ready to spell out, in some detail, how they might come to the aid of Greece, without breaching “no bail-out” rules that prevent the EU from assuming the debts of countries in the euro zone."

Would a bailout of Greece accomplish much? According to SocGen strategist, Albert Edwards, it would only serve to delay what he sees as the inevitable: a Eurozone breakup.

Meanwhile, Niall Ferguson writes in a recent FT piece that the "Greek crisis is coming to America". He argues, as we (and others) have, that the US seems to be taking false comfort in its temporary "safe haven" status, when in fact it should be looking at the longer-term effects of its own debt explosion.

"For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941..."

So I think we have enough here to highlight the risks that investors and economic thinkers are currently mulling over. The question remains: will fiscal problems in places like Greece, Spain, and Dubai spread to established financial institutions and larger economies?
Any source