Thursday, April 29, 2010

Eurozone tottering (cont.)--updated

Another day of meetings, phone calls, and statements of concern as Europe's debt crisis rolls on. The IMF is reportedly now ready to pony up $120 billion over 3 years to prop up Greece--much more than previous estimates. German politicians have also apparently hammered out a bailout plan. And Greece is said to have agreed to a severe austerity plan to reign in its out-of-control deficits.

The concern is whether all this is too little, too late. It is no longer just a Greek problem, with Portugal and Spain both beginning to experience the same financial pressures afflicting Greece. Bailing out all three countries could be more than the IMF and EU together could afford--if the crisis stopped there. Promises of austerity have been heard from the Greek government before but it is not at all clear whether the Greek people will go along with them.

Every day of "plans and proposals"--rather than actual decisions--only deepens the crisis and leaves more opportunities for the circling financial vultures.

Update: Paul Krugman in Friday's New York Times: So is the euro itself in danger? In a word, yes. If European leaders don’t start acting much more forcefully, providing Greece with enough help to avoid the worst, a chain reaction that starts with a Greek default and ends up wreaking much wider havoc looks all too possible.

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