German Chancellor Angela Merkel and the head of the IMF warned of financial contagion on Wednesday unless a euro zone debt crisis is stopped in Greece, while investors fled to the safe havens of the dollar and gold.
Greek public and private sector workers shut down airports, tourist sites and public services in a general strike against harsher austerity, accepted by the government as the price for a 110 billion euro ($146.5 billion) EU/IMF bailout on Sunday.
Merkel told parliament Europe's fate was at stake in the most serious crisis in the single currency's 11-year lifetime, and other euro zone countries could suffer the same fate as Greece unless the international rescue succeeds.
Anxiety over a widening of the euro zone debt crisis sent stocks tumbling worldwide, and the euro to a new one-year low.
Shares in Spain and Portugal, seen as the next two targets for investors testing the European Union's will and ability to defend weak euro zone economies, fell for a second straight day.
And this morning we learn that Moody's is looking to review dropping Portgual's credit rating another couple of notches too. The Greek Fire continues to burn through the Eurozone, leaving nothing but destruction it its wake. Everyone's asking "Who's next?" to be consumed in the flames.
The reality is that the $146.5 billion in aid to Greece will not put out the fire, it will only spread the flames around further, like water on a kitchen fire. The even more harsh reality is Spain and Portugal are most likely going to need bailouts of their own and very, very soon. Nobody's going to have the money to pay for those bills...unless you think the US taxpayer is going to foot the bill through the IMF.
I don't. We've got our own little problems to deal with. The EU is bailing out Greece.
Who's going to bail out the EU?
I've been in lockstep with your dour assessment of the Greek situation, it really seems to be a perfect storm of an intransigent population larded with goodies that they can't afford, enabled by an EU that refused to scrutinize a part of "historical" Europe, and then left to implode by the obstinate Germans whose first concern seems to be themselves and not the larger EU project.
ReplyDeleteI didn't think the EU would be this fragile, I expected a quicker decision (although one still devastating to Greece). I'm even hearing that this is the US's problem (???!!) for not getting involved sooner, like EU egos would have allowed it.
There is no leadership, and the fact that no one is willing to recognize the truly unsustainable nature of the Greek state makes it all worse. Now the US will get to pay, and what looked like a recovery that could have taken off is now once again in question.