Basically a ‘rescue deal’ was made last week for Greece, including a 50% default and 130 billion euros worth of bailout.
Papandreou, the Greek PM, decided to put this to a referendum, as austerity measures are going to meet severely reduced living standards for Greeks.
The markets plummeted and Sarkozy and Merkel told him he’d get no loans until after the referendum. After Papandreou’s own party revolted, the referendum is off the table (ironic in the birthplace of democracy). This is more to save Italy and Spain, to whom interest on borrowing is reaching the 7% barrier of no return (Italy is 6.3 right now)
Papandreou is still facing calls to resign, but Greece might ultimately get kicked out of the EU regardless of him. That’s not the problem, as Greece is only 2% of the EU’s economy and French and German banks, though having a lot invested in Greek debt, will shake it off. However if the contagion comes to Italy and Spain we’ve got a shit sandwich ready to go. And the Italian government of Berlusconi fills me with no hope, though it says a lot about the state of Italian politics that they can’t find any alternative.
The UK is not involved as much as Germany, who is ultimately bearing the brunt of the southern european nation’s indolence over the last ten years but I wonder how much bailing out there will be before people say ‘no more’.
papandreou is resigning, Berlusconi in Italy is resigning (interest on debt is now 7%, the ‘danger zone’ where Ireland and portugal needed bailouts) and basically shit is getting worse and worse.
how can these guys just resign? Is it better that they resign or would it be better for them to stay and take responsibility? To me, it looks as if they mismanaged their respective countries’ finances and then just jump ship when all goes to hell. I could be wrong though, just what it looks like.
[quote]StevenF wrote:
how can these guys just resign? Is it better that they resign or would it be better for them to stay and take responsibility? To me, it looks as if they mismanaged their respective countries’ finances and then just jump ship when all goes to hell. I could be wrong though, just what it looks like. [/quote]
Papandreou only took charge in the last 2/3 years, he was in opposition most of the time…he was only the unlucky one who pitched up at the end of the party and was given the bill. Berlusconi isn’t even the problem, a trained chimpanzee should have beaten him in an election, it says a lot about the fighting and fragile nature of the Italian left wing that the Prodi government was even worse than Berlusconi.
In France, Sarkozy’s government recently decided tax raises and spend cuts, both at the same time.
Yet, everything is quiet right now.
No riot, no strike, no protest. no occupied street.
nothing.
which means that the situation is starting to look really ugly.
From what I’ve been reading, this situation can turn very ugly and scary quickly in the US. In the western world, to many promises have been made with other peoples money.
"Can?t say we didn?t warn you. Municipal bankruptcies are back in the news today in a big way, with the FT reporting that Jefferson County, Alabama has filed for the largest such bankruptcy in history after a deal with its creditors fell apart overnight.
The story is filled with the usual cast of characters: failed infrastructure spending, public sector malfeasance, and private sector wrong-doing. But events in Jefferson might herald the beginning of a new problem. As the article notes, despite renewed confidence in the municipal bond market this year, this latest bankruptcy filing will push up borrowing costs for other municipalities in Alabama that need to tap the market. If this trend spreads, given the mountains of debt held by cities around the country, even local governments that didn?t have a solvency problem at first will find themselves in trouble…"