Even after a fresh infusion of $10.7 billion, the Greek economy is still in trouble. A Christmas rescue package was delivered to the floundering nation to stave off yet another impending cash crisis. Despite the bailout funds, the rescue plan stalled and the euro currency may also be on the rocks.
The much-needed funds from the eurozone were intended to keep Greece operational during the short term, but will likely be insufficient to resuscitate that nation’s ailing economy. In fact the outlook for upcoming Greek bond sales is gloomy at best.
Led by a new government, Greece faces continued demands from other eurozone countries to slash public spending and rein in its runaway debt. Meanwhile, the country hopes to find ways to stimulate its stagnant economy so that the country can pull itself out of the morass that has captivated it for years.
Continued Greek economic trouble points only to increased hardship for other nations in the region. The IMF reportedly is working on an $800 billion bailout package for Italy and Spain, a sign that the continent is losing more ground than it gains through bailouts. The IMF money would presumably include funds from nations outside the eurozone, suggesting that the entire world could be drawn into the European financial crisis should the euro implode.
Meanwhile, Europe now looks to Germany and France for hope, but those nations are standing on fiscal foundations that are increasingly unstable. After providing the impetus for much of the bailout activity in Europe, Germany suffered from limp demands for its bonds and now seems increasingly prepared to let the euro collapse.
The European Stability Facility Fund offers an encouraging sign amid the gloom. It says it has ample cash on hand to handle current emergencies, and it hopes to build itself up to a $1.3 trillion reserve. Meanwhile, experts in the United States called for more fiscal unity in Europe as a way to control the crisis.
Although leaders insist that preservation of the euro and reduction of debt is the only hope to preserve sovereignty, officials in Belgium are now suggesting that euro zone nations can adopt their own monetary policies. Meanwhile forces inside Germany want to expel Greece and Portugal from the euro zone to relieve the pressure that now threatens to pull down the German economy.
