International Investing

Fears the Greece will leave the eurozone has sparked a record number of bank withdraws, which could lead to a $1 billion bank run, according to an LA Times report. Central Bank President Karolos Papoulias also warned of a "great fear that could develop into a panic", if political leaders didn't take decisive action to stem the crisis.

Concerns have mounted throughout the eurozone that a Greek exit from the monetary union and default on its debt could lead to renewed troubles in Portugal and Ireland. These two countries are also highly indebted and rely on foreign loans, while they are also much larger, which means their failure could cascade into a far worse crisis.

Chancellor Angela Merkel's Christian Democrats (CDU) party suffered a crushing defeat on Sunday in an election in Germany's most populous state, according to a Reuters report. The win was chalked up to the Social Democrats (SPD) and Greens, who have a combined 51% share of the votes that was enough to give them a slight majority ahead of the national elections.

The move adds to the political tide against bailouts and austerity, after Greek and French elections also yielded increasingly socialist victories. As a result, the once-long-shot possibility of Greece leaving the eurozone now appears more and more inevitable. In fact, a Swedish Riksbank representative said that Europe's central bankers are already discussing the possibility.

What does that mean for the eurozone and investors? Experts remain divided on the aftermath of a Greek exit, but nearly everyone is concerned about the implications for larger economies like Spain, if the default and departure take place.

China's industrial output slowed in April to its lowest level since May 2009, according to a report by the Wall Street Journal. The figure rose just 9.3% in April, while retail sales slowed to a 14.1% rise, which is the lowest level in 14 months. Investors are concerned that these slowdowns could add to the global economic turmoil.

The slower growth rates could, however, make fiscal easing more likely, especially given the slowdown in consumer inflation. All eyes are on Premier Wen Jiabao who may reverse many of his prior policies reining in property and consumer prices, which has been at least partially responsible for the country's slowdown.

Emerging markets, such as the BRICs, have traditionally been seen as strong investments. But the recently slowdown in emerging markets could change some perceptions. The causes of this slowdown range from reduced demand for commodities from China, hurting exporters like Brazil, to domestic budget deficits that are hurting India's ability to grow.

Brazil has cut its interest rates several times after its gross domestic product (GDP) growth slowed from 7.5% in 2010 to just 2.7% last year. Similarly, India's central bankers have loosened lending requirements to try and stimulate their slowing economy. China has already been in the headlines and Russia has also seen its growth slow in recent quarters.

Given the focus on the eurozone, many of these problems have gone unreported in traditional financial media. But this slowdown should be a wakeup call for investors with exposure to the BRICs and other emerging markets around the world.

Eurozone concerns continue to persist amid Greece's election turmoil. Financial markets are worried that the new government will refuse to abide by the conditions of its bailout by reversing austerity measures. According to the WSJ, this has led to some eurozone members debating delaying the next bailout payment to Greece.

Yields on Spanish 10-yr bonds also rose above 6% today, which is seen as a critical level for fiscal sustainability. If the country cannot rein in these yields and the ECB doesn't take action, Spain could become another in a growing line of countries requiring a bailout. But in this case, Spain's large size could pose a much greater risk than Portugal, Ireland or Greece.

Investors looking to remain in equities, but mitigate their risk, may want to consider a global mutual fund, such as the PIMCO All Asset All Authority Fund (PAUIX) that offers diversified exposure around the world.

German Chancellor Angela Merkel warned Greece to stick with its reform plans and budget targets agreed to under its international bailout plan earlier this week, according to a recent Financial Times article. The warning comes after the two largest political parties in the country lost support during Sunday's election, raising some concerns in the financial markets.

In particular, the financial markets are now questioning whether Germany would remain able and willing to provide additional financial support to a struggling Greece. These concerns were heightened after France's Nicolaus Sarkozy lost the Presidential election to socialist candidate Francois Hollande, which could put a ceiling on France's assistance moving forward.

Combined, these factors have led to speculation that Greece could ultimately make a move similar to that of Iceland, who let its banks default and has since recovered.

Greece's two pro-bailout parties, the New Democracy and PASOK parties, fell two seats short of an absolute majority in the parliament today, according to a Reuters report. The move could put Greece's ongoing austerity plans at risk and with the additional bailouts the country may need.

Perhaps more troublingly, socialist presidential candidate Francois Hollande beat conservative Nicolas Sarkozy to become the new president of France on Sunday, according to a separate Reuters report. With his rhetoric against austerity, France may join the anti-bailout movement.

Combined, these two elections mark a troubling new tide against bailouts that could destabilize the eurozone. Failure to adhere to austerity measures could shake bond market confidence in these countries and lead to higher interest rates that exacerbate their problems.

Indonesia may not be a member of the so-called BRIC countries, but some investors believe the country is a better investment than Brazil, Russia, India or China. Between 1999 and 2011, the country has grown at an annual clip of 6.5%, according to the World Bank.

Perhaps more impressive is the fact that this growth isn't dependent on exports. Domestic consumer spending accounts for more than half (55%) of Indonesia's gross domestic product, compared to just 35% of China's gross domestic product.

And in the last quarter of 2011, Indonesia's GDP exceeded India's 6.1%, Russia's 4.8% and Brazil's 1.4% growth rates. International investors looking to capitalize on this growth may want to check out the Market Vectors Indonesia Index ETF (IDX).

China's slowdown has taken its toll on the seemingly invulnerable Australia over the past few quarters. Despite avoiding much of the global economic recession, the country has seen a number of recent reports suggest that it could be in for a long-term slowdown.

The S&P/ASX 200 is still trading up 10.77% so far this year, but has only realized modest single digit returns so far this quarter. The biggest losers in the index appear to be utilities and information technology companies, while energy and industrial sectors helped pick up slack.

In the meantime, the Reserve Bank of Australia cut interest rates by a hefty 50 basis points to 3.75% to help stimulate the economy. The cut was roughly double what economists expected, but may prove necessary in order to jumpstart the economic engine given China's slowdown.

Germany has been one of the eurozone's bright spots, with robust economic growth and steady employment. But the eurozone crisis may be taking a toll on the country. German jobless claims unexpectedly increased to a seasonally adjusted 19,000 to 2.87 million, according to Bloomberg.

But before hitting the panic button, investors should note that the unemployment rate of 6.8% remained unchanged and at a twenty-year low. The figure is also well below the 10.9% unemployment rate estimated for the eurozone as a whole by Eurostat.

However, some countries like Greece, Spain, Italy and Ireland have seen unemployment rates - particularly among youth - soar higher than 35%, according to Bloomberg data. Some analysts believe that this will become a cause for greater concern sooner than later.