My latest for Moneyweek:

Stock markets collapsed yesterday in dramatic fashion as credit rating agency Standard & Poor’s (S&P) lowered Greece’s credit rating from BB+ to BBB+. In other words, Greek debt is now officially junk (according to S&P at least, and the other agencies may not be far behind).

S&P warned that if Greece restructures her debt, bondholders could recover as little as 30% of their initial investment.

No wonder investors panicked. Yields on ten-year Portuguese bonds jumped 48 basis points (that’s 0.48 percentage points), while Irish yields surged despite the widespread praise the country’s enjoyed for its cutbacks. Both the euro and the pound fell against the dollar. Stock markets went into freefall, with the S&P 500 falling by almost 3%. Even my uber-bullish broker was buying puts.

The only thing to rise was the US dollar.

Oh, yes. And gold…

Read on …