Finance news. My opinion.

Investors are getting increasingly worried about whether Greece will remain in the eurozone. And they should.

There are a series of upcoming events that could spell the end of a deal, put in place nearly three months ago, to restructure Greece’s debt under strict terms dictated by the European Union, International Monetary Fund and European Central Bank, known as the troika.

"The threat from Greece remains real, and Greece exiting the euro area would likely have contagion effects that cannot easily be addressed in the current set-up," said Bank of America Merrill Lynch analysts in a note Monday. "The next weeks are crucial."

Greece has been struggling under a mountain of debt, as it tries to push through unpopular austerity measures and get its economy on solid footing. Without a cohesive government, that battle just got tougher.

Here’s what next in the Greek political drama, and what it could mean for the rest of Europe and the global economy.

Where do things stand after last week’s national elections? There is still no party that has been able to form a new government. The two parties from the previous ruling coalition that supported austerity and the debt deal, New Democracy and Pasok, only have 149 seats between them and 151 are needed.

So far, none of the other parties are willing to join them, given Greek voters’ anger over the harsh austerity measures.

If Greek President Karolos Papoulias is not able to bring together a new ruling coalition by Thursday, he is expected to call for another round of voting, likely in mid-June.

What is likely to happen if new elections are held in June? Recent polls and various experts seem to agree that the Coalition of the Radical Left, also known as Syriza, would be the top vote getter in the next round. Syriza has gained solid support since finishing second in last week’s round of voting.

If it can form a majority coalition with other anti-austerity parties, that would leave Greece with a government opposed to the earlier deals made with the EU, IMF and ECB, which has to approve funds for Greece that would allow the government to pay its bills and make its bond payments.

Whether the June election result would lead to a disorderly default and a Greek exit from the euro is far less clear.

"Even Syriza is not really interested in getting out of the euro. Their primary focus is to renegotiate the bailout package," said Dimitri Papadimitriou, economics professor and expert on Greece from Bard College.

But without financial support from the so-called troika, it will be tough for Greece to meet its financial obligations.

Can Greece stop paying its bills and still stay in the eurozone? That is the biggest unknown, and probably the biggest worry for markets.

Elisabeth Afseth, fixed income analyst for Investec Bank in London, said if Greece stops paying its bills, that will mean the end of the funding it so desperately needs. If that happens, it won’t have much choice but to start issuing its own currency to pay its ongoing bills.

How Greece can stay in eurozone

But Papadimitriou said that other European leaders are also loath to have Greece exit the euro, due to the shock it might cause for the continent’s already-fragile financial system 100% free credit score. Therefore, he said, it is possible, albeit unlikely, that there could be yet another new deal even if Greece stops paying what it owes.

"I would expect the European finance ministers’ meeting to have intense discussions this week," he said. "The best case for keeping Greece within the euro would be for the rest of Europe to be proactive in trying to come up with a renegotiated deal suitable for all parties. But I’m not optimistic."

What’s the best case scenario for Greece leaving the euro? In the best case, the ECB steps in and contains the so-called contagion effect.

While the central bank’s drumbeat has been to not be the lender of last resort, it has also made it clear that it would do everything in its power to keep the crisis from spreading.

Greek euro exit won’t mean tragedy

A dozen European countries are already in recession but thanks to Germany’s surprise growht, the entire EU and eurozone managed to stave off recession in the first quarter.

Even in this best case scenario, one in which measures to prop up the non-Greek sovereign debt work, the austerity measures needed to pay for them would send the remaining countries of the eurozone and EU into an even deeper, more prolonged downturn.

Yields could soar on government debt for Portugal and Ireland, let alone much larger economies like Spain and Italy, vastly increasing the costs for the remaining European governments that are paying for various bailouts.

That would also weigh on the already slowing growth in both the United States and Asia.

How bad could things get? Things could be worse than that — far worse.

"I don’t think anyone at the present time can quantify the contagion effect of a disorderly exit of Greece from the eurozone," said Papadimitriou. "No one can predict the markets. They have a mind of their own.

In a worst-case scenario, the Greek exit prompts other countries to leave the euro, as voters there follow Greek voters’ lead and rebel against austerity measures.

"As it stands now, there’s no precedence for leaving," said Afseth. "If Greece leaves, all of sudden there is precedent."

If larger countries follow Greece out of eurozone, it could cause a meltdown in the European banking sector, which holds billions of euros of sovereign debt of the other troubled economies, as well as private sector loans to consumers.

In turn, businesses in those countries would be unable to pay given their suddenly devalued currency.

While U.S. authorities have said U.S. banks have relatively limited exposure to European sovereign debt, the major banks here do have exposure to the European banking system, so a meltdown in European markets would be felt in the United States and around the globe. 

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Scott Thompson’s reign as Yahoo’s CEO is in jeopardy after just four months on the job because he allowed an inaccuracy about his academic credentials to recur for years.

A major Yahoo shareholder who exposed the fabrication is now leading the charge to oust Thompson for unethical conduct. In a letter Friday, activist hedge fund manager Daniel Loeb demanded that the board of the struggling Internet company fire Thompson by noon EDT Monday or face possible legal action.

“CEO’s have been terminated for less at other companies,” wrote Loeb, who controls a 5.8 percent stake in Yahoo through his hedge fund, Third Point.

Yahoo reiterated Friday that “the board is reviewing this matter and, upon completion of its review, will make an appropriate disclosure to shareholders.”

Thompson’s troubles revolve around an exaggeration about his education at Stonehill College, a small Catholic school near Boston where he graduated in 1979. Since announcing Thompson’s hiring in January, Yahoo had included two bachelor’s degrees — one for accounting and the other for computer science — on the executive’s biography. The dual degrees appeared on Yahoo’s website and in an April 27 document filed with the Securities and Exchange Commission free business cards.

After being confronted Thursday by Loeb, Yahoo confirmed that Thompson received only an accounting degree from Stonehill. Yahoo has since removed all references to Thompson’s education from its website. The company hadn’t amended its SEC filing with the inaccuracy as of late Friday.

It’s unclear whether the inaccuracy originated with Thompson or someone else at Yahoo.

Even if Thompson didn’t personally write his biography, he almost certainly reviewed the information and should be held accountable for the distortion, said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

Yahoo blamed an “inadvertent error.” After that excuse was ridiculed on the Internet, Yahoo issued another statement late Thursday about the board’s intent to look into what happened.

Loeb is trying to oust Thompson as he seeks four seats on Yahoo’s board of directors — one for himself and three for his allies.

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French business confidence increased for the second time in nine months, suggesting growth is recovering as European Central Bank liquidity calms the region

Asian stocks rebounded Thursday on signs that a debt relief deal for Greece will go through and as an upbeat report on U.S. payrolls added to optimism about the world’s biggest economy.

Japan’s Nikkei 225 index rose 1.3 percent to 9,697.99. Hong Kong’s Hang Seng gained 0.7 percent to 20,765.51 and South Korea’s Kospi edged up 0.4 percent to 1,989.46.

Growing investor participation in a massive Greek debt relief deal bolstered the mood in stock markets. By Wednesday night, investors owning around half of Greece’s privately held debt had committed to a bond swap that would see them accept losses to avoid facing even bigger ones in case Athens defaults.

Greece needs at least 67 percent of investors to sign up by Thursday night, so it can get a related euro130 billion ($171 billion) bailout from European countries and the International Monetary Fund.

A private monthly report on U.S. payrolls that estimated companies added 216,000 workers last month, beating expectations, also helped boost investor sentiment.

“Risk assets are set to benefit from the improved sentiment, though trading may still be cautious ahead of a slew of events later this week,” including interest rate decisions by the European and British central banks and U.S. jobs data, strategists at Credit Agricole CIB wrote in a research note.

In mainland China, the benchmark Shanghai Composite Index rose 0.9 percent to 2,416.54 and Australia’s ASX/S&P 200 was up 0.5 percent to 4,165.10. Benchmarks in Taiwan, Singapore and New Zealand also rose.

On Wall Street on Wednesday, the Dow Jones industrial average closed up 0.6 percent at 12,837.33. The S&P 500 index gained 0.7 percent to close at 1,352.63. The Nasdaq composite index 0.9 percent to close at 2,935.69.

In currencies, the euro rose to $1.3156 from to $1.3150 late Wednesday in New York. The dollar rose to 81.21 Japanese yen from 81.19 yen.

Benchmark oil for April delivery was up 14 cents to $106.02 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose by $1.46 to end at $106.16 per barrel in New York.

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Asian exporters, battling a slump in demand, are calling for their central banks to intervene after capital inflows contributed to the best start to the year since 2006 for the region

Is it possible to solve the nation’s debt woes just by hiking taxes on the rich?

Probably not.

Even if marginal income tax rates were almost 100% for the richest Americans, that still might not yield enough new revenue to keep debt under control.

The findings, reported Thursday by the Tax Policy Center and the Pew Charitable Trusts, underscore the necessity of finding a balanced approach to budgeting in the near future.

The report assumes current tax policy as a starting point, and targets debt at 60% of gross domestic product, widely considered to be a sustainable level.

"Increasing the top two or top three individual income tax rates alone cannot achieve the debt-to-GDP targets under some … scenarios," the report said.

"You just have a very big gap and not that much income up there to fill it," said Eric Toder of the Tax Policy Center.

Of course, politicians aren’t advocating for the top rates to go anywhere near 100%.

Take Obama for instance.

He wants to let the top two tax rates — currently 33% and 35% — revert to their pre-2001 levels of 36% and 39.6%.

Most folks in the top two brackets, however, would still benefit from the continuation of the 10%, 15%, 25% and 28% rates on the portion of their income subject to the lower brackets.

By historical standards, those rates are pretty low. While income tax rates for top earners have been below 40% since 1986, they were as high as 91% in the 1960s.

Republicans want to go the opposite direction, with every remaining 2012 candidate now promising reductions in marginal income rates for most taxpayers.

To balance those tax cuts out, and still lower deficits, Republicans must be prepared to slash huge amounts of spending from the budget, a difficult task when Pentagon spending is still off-limits for many party leaders.

And that’s just not feasible.

The looming debt problem is just too big. Reducing it by spending cuts alone would require draconian changes that could hurt the economy far more than a mix of spending cuts and tax increases.

America’s debt challenge

And that’s what the Pew study illustrates so effectively. An approach to deficit reduction that focuses only on spending cuts, or only on revenue, is likely to produce quite a bit of pain for targeted groups.

With federal spending on track to expand further over the next decade, most budget experts agree that lawmakers must consider an all-of-the-above approach that means tough choices for both parties.

President Obama’s fiscal commission, which never gained the necessary traction with the White House or Congress, acknowledged as much.

"Together, we have reached these unavoidable conclusions: The problem is real. The solution will be painful. There is no easy way out. Everything must be on the table. And Washington must lead," the report said.

The commission recommended hiking taxes, cutting military spending, getting health care costs under control, increasing the social security retirement age, among other proposals.

The plan went nowhere.

And with lawmakers from both political parties locked in election mode for the rest of the year, there are few indications any real steps toward deficit reduction will be taken until at least the new year.  

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The Federal Reserve said Wednesday that it is unlikely to raise interest rates before late 2014, extending a period of record-low rates by more than a year.

The Fed says it is keeping rates low to help lift a weak but modestly growing economy.

The new timeframe hints at details in the Fed’s quarterly economic forecast, which will be released later. That will show in what year policy members expect the first increase in the Fed’s benchmark interest rate. The Fed has kept its key interest rate at a record low near zero for three years.

In a statement released after its two-day meeting, the Fed said the economy is growing moderately, despite some slowing in global growth. It held off on any other new steps to boost the economy.

The statement was approved on a 9-1 vote. Jeffrey Lacker, president of the Richmond regional Fed bank, dissented, saying he objected to the new time period.

The extended timeframe is a shift from the Fed’s previous plan to keep the rate low at least until mid-2013. The change is intended to reassure consumers and investors that they will be able to borrow cheaply well into the future. And some economists said it could lead to further Fed action to try to invigorate the economy.

The forecast on interest rates will be released along with the Fed’s updated projections for economic growth, unemployment and inflation. Fed Chairman Ben Bernanke will discuss the forecasts and Fed policy at a news conference later Wednesday.

Beyond the adjusted outlook for interest rates, the January statement tracked closely to the Fed’s previous comments about economic conditions personal business card.

The central bank used the same language in describing Europe’s debt problems and the impact on the world economy.

The economy is looking a little better, according to recent private and government data. Companies are hiring more, the stock market is rising, factories are busy and more people are buying cars. Even the home market is showing slight gains after three dismal years

Still, the threat of a recession in Europe is likely to drag on the global economy. And another year of weak wage gains in the United States could force consumers to pull back on spending, which would slow growth.

The Fed has taken previous steps to strengthen the economy, including purchases of $2 trillion in government bonds and mortgage-backed securities to try to cut long-term rates and ease borrowing costs.

The idea behind the Fed’s two rounds of bond buying was to drive down rates to embolden consumers and businesses to borrow and spend more. Lower yields on bonds also encourage investors to shift money into stocks, which can boost wealth and spur more spending.

Some Fed officials have resisted further bond buying for fear it would raise the risk of high inflation later. And many doubt it would help much since Treasury yields are already near historic lows. But Bernanke and other members have left the door open to further action if they think the economy needs it.

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Turkey’s foreign minister has called for the immediate resumption of talks between Iran and major world powers to end the standoff over Tehran’s disputed nuclear program.

Ahmet Davutoglu also said at a joint news conference with Iran’s Foreign Minister Ali Akbar Salehi that Turkey was ready to host and “make any other kind of contribution” to talks between Iran and six countries leading negotiations _ the U.S., Russia, China, Britain, France and Germany.

Salehi said the six powers should enter talks without conditions, otherwise “it is a sign that they do not approve of the negotiations.”

The U.S. and its Western allies suspect Iran wants to develop nuclear weapons. Iran insists its efforts are designed for civilian power generation and research.

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Gold fell, capping the longest slump since October 2009, and silver tumbled to a three-month low as Europe’s deepening debt crisis drove commodities and stocks lower.

The euro dropped to an 11-month low against the dollar as lending to financial institutions sent the European Central Bank’s balance sheet to a record high. The Standard & Poor’s GSCI index of 24 raw materials and the MSCI World Index of equities were poised for the biggest declines in two weeks.

Platinum approached the lowest since November 2009, and palladium dropped almost 3 percent.

The ECB said lending to euro-area banks jumped 214 billion euros ($276.9 billion) to 879 billion in the week ended Dec. 23, bolstering credit to the economy during the financial turmoil. Gold has slumped 19 percent from a record $1,923.70 an ounce on Sept. 6, partly on sales to cover losses in other markets.

“What’s going on in Europe is very worrying,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pa., said in an e-mail. “The dollar’s strength is working against all commodities, including gold.”

Gold futures for February delivery declined 2 percent to settle at $1,564.10 at 1:47 p.m. on the Comex in New York. The price dropped for the fifth straight session, the longest slide since October 2009. The commodity headed for the first quarterly slump since September 2008.

Silver futures for March delivery fell 5 quick guaranteed personal loans.2 percent to $27.234 an ounce on the Comex. Earlier, the price touched $27.10, the lowest since Sept. 26. The metal has plummeted 45 percent from a 31-year high of $49.845 on April 25.

Gold imports by India, the biggest consumer, may drop as much as 50 percent this month after the rupee plunged, according to the Bombay Bullion Association. China restricted gold trading in spot and futures contracts to the Shanghai Gold Exchange and the Shanghai Futures Exchange to crack down on illegal buying and selling of commodities.

Platinum futures for April delivery declined 3.2 percent to $1,392.40 an ounce on the New York Mercantile Exchange. Earlier, the price touched $1,388.60. On Dec. 15, the metal declined to $1,376, the lowest since Nov. 13, 2009.

Palladium futures for March delivery slumped 2.9 percent to 647.15 an ounce on Nymex, the biggest drop since Dec. 14.

This year, gold has advanced 10 percent, heading for the 11th straight annual gain, on demand for an alternative investment amid slumping equities.

“Gold has been one of the best performers this year, so it comes as no surprise that we are seeing some end-of-year profit-taking,” said Ronald Stoeferle, a commodity analyst at Erste Group Bank AG in Vienna.

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Traders doubled bets on Israeli interest rate cuts in the past two weeks, speculating the central bank will act to insulate the economy from a global slump as inflation slowed to a one-year low.

The Bank of Israel may lower the 2.75 percent key rate 41 basis points over the next 12 months, compared with 21 basis points of cuts priced in on Dec. 8, according to interest-rate swaps, an indicator of investor expectations. Policy makers review borrowing costs today, with 12 out of 20 economists surveyed by Bloomberg forecasting a 25 basis-point reduction.