In a global market often driven by fear, all eyes are on Greece -- now labeled by many investors as being on the brink of financial collapse.
For them, Greece has become an edge-of-the-seat cliffhanger. Investors fear that a run on Greek debt could trigger a domino effect, plunging the entire continent into a recession. They fear that, in turn, would harm America's ability to export, increase the U.S. trade deficit, and (gulp) start a new wave of economic chaos.
But are fears of a Greek meltdown starting to reach mythical proportions? Maybe.
"We don't expect Greece to default," said David Wyss, chief economist at Standard and Poor's.
In an interview with ABCNews.com Monday, Wyss said he believes there is "ample time for the European Union to intervene as they did with Hungary in 2008." (In October 2008 the EU, the International Monetary Fund and the World Bank arranged for a $25 billion financial bailout for fiscally troubled Hungary.)
"Greece is in bad shape," he said, "and we'll continue to monitor the situation, but again, our expectation is that there will be some form of action by the EU. They can't afford not to."
Rating agencies have been roundly criticized since the 2008 financial crisis, mainly for giving seals of approval to subprime-laden debt instruments. They were also slow to spot problems with investment banks. But agencies such as Moody's Investors Service and Standard & Poor's are still among the financial system's most important smoke detectors.
S&P credit analysts have Greece's BBB+ credit rating on "CreditWatch," which is one step away from a downgrade. The influential rating agency could issue a further downgrade -- it did so twice in 2009 -- but that still doesn't necessarily mean Greece is going to default on its debt, even without some form of intervention, Wyss pointed out.
S&P and other rating agencies, not to mention global bond market participants, have been closely watching the Greek government's 2009 budget deficit, which is estimated at 12.7 percent of the country's GDP and expected to explode next year unless some form of financial rescue plan – such as a bridge loan from the EU and International Monetary Fund, or a European version of the TARP – can be set up in the coming weeks.
"The ratings on Greece have been placed on CreditWatch-negative to reflect our view that the fiscal consolidation plans outlined by the new government are unlikely to secure a sustained reduction in fiscal deficits and the public debt burden," S&P analyst Marko Mrsnik said back in December when fears about Greece's financial situation first started to take hold in the market.
"The average American should not be worried about any direct fallout from the situation in Greece, but there is an indirect impact that people will want to pay attention to," said Andrew Barber, chief strategist at the research firm Waverly Advisors. "Concerns over Greece and other weaker European economies could weaken the Euro versus the dollar, which in turn undermines the competitiveness of U.S. export industries."
But there are other views -- such as that of Niall Ferguson, author of "The Ascent of Money." Writing in the Financial Times, Ferguson warns that a Greek-like debt tragedy could soon hit the U.S., even though the American dollar is generally treated as the financial world's safe haven.
"U.S. government debt is a safe haven," he wrote, "the way Pearl Harbor was a safe haven in 1941."