Salon.com > Ken Maguire

Is a Greek debt default still inevitable?

Thu, 23 Feb 2012 14:00:00 +0000

ATHENS, Greece — They contemplated a divorce but ended up having another baby.

Greece and its euro zone partners saved their marriage by agreeing on a $170 billion bailout, but it hasn’t squashed talk of a messy breakup.

Some analysts see a Greek debt default as inevitable. Even Greece’s lenders fear the program is “accident prone,” as they said in a report for euro zone finance ministers before they approved Tuesday’s bailout.

It’s far from a universal opinion. Greek leaders lauded the agreement, naturally, saying it saved the country from a chaotic default. Others add that Greeks — despite the occasional violent protest against austerity measures — grudgingly accept that reforms are necessary.

Still, more of the same won’t cut it, said Costas Michalos, president of the Athens Chamber of Commerce and Industry.

“It’s a bad rescue package,” he said. “It’s not the right mixture of economic policies. If we follow the same economic policies of the past two years, there will be no other option than default, which I’m sure no one wants.”

The EU’s leadership crisis

Thu, 08 Dec 2011 16:00:00 +0000

ATHENS, Greece — Over the next two days, leaders struggling to save the euro are holding yet another summit to end all summits.

German Chancellor Angela Merkel and French President Nicolas Sarkozy will be in the spotlight, attempting yet again to forge a robust solution to the euro zone’s debt crisis. They have proposed bold changes to the way the euro zone governments spend money, with tough oversight they hope will ensure fiscal stability. The French president has tried to speak convincingly of guaranteeing “the future of Europe.”

If successful, the leaders will be hailed as saviors. But will this really be their finest hour? Will they finally manage to achieve the overarching goal of restoring confidence in the battered euro, saving Europe and the world from another devastating recession?

Many political observers are pessimistic. For nearly two years, summit after summit has failed to produce a solution, in large part because of weak leadership, they argue. Unlike the towering visionaries who created the common market and its currency, Merkel and Sarkozy just don’t seem to be up to the task, they say.

The obvious solution Europe won’t embrace

Wed, 16 Nov 2011 19:00:00 +0000

ATHENS, Greece – Think you got problems? Cape Verde spent the past decade fighting its way out of poverty to achieve “middle-income” status.

But the escalating euro zone crisis is jeopardizing that accomplishment. The West African island nation’s top trading partners? Portugal and Spain.

Contagion – meaning collateral damage from direct or indirect exposure to the problem – is not just a euro zone headache. Much of the world is linked through financial markets and trade. The danger is investors run to safe havens, economies shrink, and unemployment rises. The U.S., China and India have all weighed in on its perils. U.S. states have reason to be concerned about the local impact.

Even tiny countries like Cape Verde, with populations of a half-million can’t escape, as they confront lower demand for exports and less foreign investment.