France and Germany have been in the spotlight of late with France joining the UK in levying a once-off tax on banker’s bonuses.
Germany also likes the idea, and bankers remain appalled as they contemplate what this will mean.
But everyone should be focusing in on Greece where there was another shock overnight
Greece revealed a public debt of 300 billion euros (or more than $A480 billion) overnight as the government called a crisis meeting on its financial woes and the European Union met amid disagreement on how to help a eurozone member in Greece’s position.
“The country’s debt has reached 300 billion euros (442 billion US dollars), which is the highest level in our country’s modern history,” deputy finance minister Filippos Sahinidis said after Prime Minister George Papandreou convened an all-party crisis meeting.
The budget tabled by the government last month estimated the 2009 debt at 272.3 billion euros, with a 294.95-billion-euro forecast for next year.
Nothing seems to have equipped the EU or the European Central Bank with the current situation of a member country struggling in insurmountable debts. So far the impact has been limited to Europe and spreads on debt and currencies traded elsewhere haven’t moved. Not even when Dubai’s approaching debt implosion erupted
But now the debt problem in Greece has been clarified and it is simply enormous, much bigger than the size of the economy.
It came as Europe’s leaders started a two day meeting in Brussels which was supposed to wrap up 2009 and look into 2010 with a bit more confidence than a year ago. Climate change (and bashing banks) were top of the agenda. But they pale against the possibility of Greece being unable to service its debts (let alone start repaying them).
Instead they have to contemplate a financial black hole in Athens, which could drag down the entire euro currency area.
The fiddles on economic figures, the lack of disclosure and the outright lying by the previous conservative government have been exposed, raising fears of national bankruptcy.
Greece’s credit rating has been cut to BBB and could be cut again. Greece’s position has worsened faster than the other basket cases of the eurozone: Spain, Portugal and Ireland are all on watch lists for possible rating cuts because of rising debt and falling revenues. But there’s more confidence about these economies than in Greece.
Media reports suggest the left of Greek politics and society won’t wear spending cuts or other reductions in government activity, reviving the prospect of more ruinous riots by anarchists and other extreme elements that we saw a year ago and again briefly this week in Athens.
German chancellor Angela Merkel insisted that the EU shared a “common responsibility” for Greece, which might come as a bit of a shock to those in Holland or France, or even Britain and in the backblocks of Bavaria and Austria.
But it could very well see 2010 as the defining year for the EU, at a time of its greatest reach for power with a President and Foreign Affairs spokesman and all the trappings of a quasi government, and of the ECB, which wants to be the dominant central bank globally.
Of course they owe Greece – everything really.