Greek Financial Debt Crisis Only Part of EU's Woes
The Greek crisis has precipitated the existing crisis of the
A monetary union, however, was successfully created, with its common currency, the euro, but the threat to its success, known from the start, was that national economic differences, dictating different policy choices, with consequent national budget discrepancies, would eventually undermine the euro.
The euro, after a period of weakness shortly after the circulation of banknotes and coins in 2002, increased to a high of more than 50 percent over the dollar but is now falling back.
Recent complaints in
This policy was financed by the Chinese government's unceasing purchase of dollar Treasury bills, motivated by the uncomfortable position
Today's European crisis was precipitated by Greece acting with possibly reckless honesty, and Germany behaving badly toward Greece (the latter a case of the pot calling the kettle black; Germany itself is running a deficit of some 3 percent over the EC stability pact limit -- promising, like Greece, to do better in the future).
The endangered are in states governed by
Greece, of course, has only itself to blame for its budget crisis since the governments preceding the return of the Socialists, and
Papandreou, newly in office, revealed what had been going on. German bankers and commentators and even Mrs. Merkel have suggested that Germany might abandon the euro and let the Mediterranean EU members who belong to the euro zone and experience debt problems -- Greece,
Germany could then gather the virtuous
Greece, despite all, on Monday (
Some form of managed Greek default would be less painful and more constructive. Since a large part of the Greek debt is held by German banks, such a managed default might have a certain poetry in it.
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Greek Financial Debt Crisis Only Part of EU's Woes | William Pfaff
(c) 2010 William Pfaff