THE END OF THE BEGINNING?

In the space of 24 hours the Greek government has escaped a vote of no-confidence

So far so good.

However, Allied Irish Bank has effectively defaulted and think tank Open Europe has called on the IMF and Europe not to give Greece a second bailout - instead manage its default and restructure to scale down the event's impact.

AIB's credit event is fairly minor for the bank, not unexpected and for a very small tranche of senior debt.

However, it calls into question what the scope of Greece's CDS spread will be? How many underwriters will be affected if Greece defaults and CDS are activated - indeed, will the CDS be able to cover the default?

It is now known that UK banks have been shifting their exposures away from the Eurozone and the Treasury is holding emergency talks about what to do if contagion spreads.

The problem now is what will happen? How bad is it going to get? Open Europe firmly believes that even a second bailout will just delay the inevitable and the markets appear to agree with Greek spreads heading even higher than before.

We are in new territory every day it seems and the actions of both banks and countries will be vital if the global economy is to avoid going down the pan.

In the words of Winston Churchill (I don't know if Goodwin's Law applies to Winnie):

"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."

A tad hyperbole perhaps, but as we face this uncertainty then that view could be more pertinent than any of us realise.