EU Preparing for 'State of Emergency' after Greek Talks Collapse

Germany's EU commissioner said on Monday it was time to prepare for a "state of emergency" after talks collapsed at the weekend to rescue Greece from default and ejection from the euro.

Greek stocks fell 6 percent, while banking stocks tumbled as much as 12 percent. Greek two-year government bond yields surged more than 3 percentage points to 29.02 percent.

"We should work out an emergency plan because Greece would fall into a state of emergency," Germany's EU commissioner Guenther Oettinger said. "Energy supplies, pay for police officials, medical supplies, and pharmaceutical products and much more" needed to be ensured.

The remaining major disputes still seem to be over the extent of austerity (including things like [value-added tax] increases), Greece's state pension system, and further reform to hiring and firing laws in the country. While June 30 is the deadline for Greece to make its payment to the International Monetary Fund, it must also make a June 20 payment to the European Central Bank. Greece's two-year yield is higher by 234 basis points at 27.88%.

-RW