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Tight Times: Greece, Portugal, Spain On The Block?

  • February 10th, 2010
  • Posted by EUEditor

euro-symbol-reduced.jpgThe chance of governments defaulting on their loan repayments has imperilled the Euro currency, with stock markets faltering and talk of intervention from Brussels.

Out of recession in 2008-9, already burgeoning budget deficits and public debt in Greece came to a head, with the declaration of a grossly unpopular austerity program.

The left-of-centre Pasok government has faced a rebellion among its constituency, including public sector workers, as it outlined plans for an attempted reduction of its deficit from 12.7% of GDP, to 3%, this year.

Sceptical Europe Union officers, among others, have been chiding Greek authorities over mismanagement of the books, for some years, including efforts to hide information and breaking of rules for maintaining the Euro currency.

Ongoing meetings of officials, at Brussels, will commence again this Thursday (11.2.10).

More than half the EU member states so far participate in the “Eurozone”, and to maintain the Euro they agree to limits on their deficits and national debt; the paying of fines if they deviate from the agreed guidelines, and setting of interest rates by the European Central Bank.

The crisis in  Greece focuses on both high interest payments on current debt, and approaching maturity dates for ten-year borrowings which the public authority may not be able to meet.

After the last year of high expense, in response to recession, other governments are under similar pressure, including Portugal, to an extent Ireland which has been operating an austerity program for the past year, and also larger countries, notably Spain. Italy is next mentioned, for a high debt ratio to GDP; further back in the field of considerations, even France.

Fears of structural break-down have shaken stock exchanges in Europe and the United States, with weak share values, and in recent days a weakening of the Euro against the US dollar.

Reference

Lisa Abend, “Spain’s troubled economy …”, Time, Madrid, 8.2.10. www.time.com/ (9.2.10).

“Greece Finance Minister says turning for help would send ‘worst possible signal’”, Telegraph, London, 9.2.10. www.telegraph.co.uk/… (9.2.10).

Sarah Turner, “Europe stocks flat at earnings off-set Greece hope”, Market Watch, NY, 9.2.10. www.marketwatch.com (9.2.10).

EUAustralia Online: “New stats chart 2009 recession”, 20.1.10; “Unease over economy”, 19.1.08, 23.1.08, 22.1.

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