Greek debt crisis may be first domino for Europe

When countries don't manage debt, the trouble reaches far and wide. That's what's happening now in Greece. The government replaced its finance minister today -- to stave off a modern Greek tragedy, as CBS News correspondent Anthony Mason reports.

Greece's cabinet reshuffle was a desperate effort to restore confidence after a week of turbulence on the streets of Athens, where protesters balked at proposed austerity measures in the debt-ridden country.

The White House welcomed the firing of the Greek finance minister.

"We support the government and the people of Greece in their efforts to get through these current financial difficulties," White House press secretary Jay Carney said Friday.

But Greece has a long way to go. With a population of 11 million, Greece has a debt of nearly half a trillion dollars. And global investors worry if Greece defaults, it could be the first domino to fall in a new global debt crisis.

That's because "It's not just Greece," said MKM Partners chief economist Michael Darda, "but also Ireland, Portugal. Spain. ... And Spain's economy is in deep trouble."

The unemployment rate in Spain has soared to 21 percent. Tiny Portugal also has a debt of nearly half a trillion dollars. And Ireland's debt is almost equal to its annual economic output.

"And the banks in Europe own that debt. And the banks globally are all interconnected," Darda said.

The biggest holders of that debt are German and French banks. President Nicolas Sarkozy of France and Chancellor Angel Merkel of Germany met today to discuss releasing more bailout money to Greece.

But in the worst case scenario, economists say, the Greek debt crisis could become Europe's Lehman Brothers: A catastrophic failure that freezes the credit markets and infects the U.S. economy:

"The stock market would likely fall. The credit markets would tighten up. The economy slows, job creation slows," Darda said. "So it would not be a happy scenario."

European leaders will meet through the weekend to try to buy time. But as one Greek economist put it, at this point "not even god almighty" as finance minster can save the Greek economy.

  • Anthony Mason

    CBS News senior business and economics correspondent; Co-host, "CBS This Morning: Saturday"