Monday, June 20, 2011

Crossing My Fingers for Greece, the EU, and the World

Don't know about you, but I am holding my breath about Greece and keeping my fingers crossed. While here in America we've been paying attention to such stupid stuff as Bristol Palin's virginity and Congressman Weiner's weiner, there has been rioting in the streets of Athens as the government of Greece tries desperately to put its financial house in order.  This is not a "so what" for the rest of Europe or for the beleaguered American economy.  If Greece goes under, it  potentially takes the rest of  the European Union and the Euro itself with it.   That could have a major impact on all of us all over the world.  Isolationism is not a viable option anymore.

Here's a quote from Reuters Quick Guide to the Crisis:
Greece has a sovereign debt pile of 340 billion euros ($481.5 billion), more than 30,000 euros per person in a population of 11.3 million. The 110-billion-euro bailout it accepted last year from the European Union and International Monetary Fund has proved insufficient and a second package worth 120 billion euros is now under discussion. With its debt equivalent to 150 percent of annual output, Greece holds two unwanted world records: the lowest credit rating for a sovereign state, and the most expensive debt to insure. Its people have run out of patience with an ever-deepening austerity drive that has slashed public sector wages by a fifth and pensions by a tenth.
Greece is between a rock and a hard spot-- or, to use an ancient Greek literary analogy-- between Scylla and Charybdis.  In order to secure  bailouts from the European Central Bank and the IMF, the government has had to cut jobs and services to the bone.  This has shrunk the sick Greek economy even more, created massive unemployment and civil unrest, and made the prospect of  paying the debt even more unlikely. France and Germany, the  EU powerhouse economies, are getting nervous.  Who knows how long their citizens will be willing to shore up  Greece? They are still offering help, but insisting on stricter and stricter oversight.  The situation does not look good.

Like I said, I'm keeping my fingers crossed for Greece. You should do the same.  A little prayer wouldn't hurt either. The medicine will be tough, but the alternative is even tougher.

No comments: