Germany calls Greece’s problems “tip of the iceberg”

Eurozone right.jpgFinancial crises take time to mature. Yet until the end is nigh, apologists will insist that nothing needs to change. Thus valuable time is wasted.

Last year, Iceland was the obvious example of this problem. Now it is Greece, a eurozone member.

Back in January, S&P had downgraded Greece’s bonds, due to debt concerns. And they were already yielding record amounts versus the German benchmark. Since then, nothing has really changed, and there is talk that Greece may soon need a rescue package from the International Monetary Fund (IMF).

Will Greece now move to tackle its high debt, low growth problem? Probably not, as the government is already facing major social unrest. But as Germany’s Budget spokesman, Norbert Barthie notes, Greece is just “the tip of the iceberg” within the eurozone. Portugal, Ireland, Italy and Spain all face similar problems, whilst Austria had this week to nationalise its 6th largest bank following losses in E Europe.

The concern, as the Wall Street Journal notes, is “that the Continent’s economic recovery could be derailed.” Already, it says, the growing crisis is forcing “financially stronger countries to think about how to shore up other members of the euro zone against a potential financial-market rout“. This may still be a relatively small risk, but it is no longer one that can be safely ignored by the chemical industry.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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One Response to Germany calls Greece’s problems “tip of the iceberg”

  1. Don @ currency day trading 25 April, 2010 at 9:57 pm #

    My two cents on the PIIGS matter:

    This isn’t going to work out for the Euro-Zone. In my opinion they made a huge mistake when choosing for one currency.

    You can not have one currency, If all countries in the Euro_Zone keep there own governments.

    Now every government/country has to be successfull to push the Euro up. Which is impossible, so the weaker countries will always pull the strong countries down.

    If you have 1 currency you need ONE central government and one monetary pollicy. You would have to have a set up like the USA. 1 president leading all the separate states.

    For Europe and the EUro the only way is down. THe issue that countries can not print more of their currency to solve or help with their deficit problem will show to be a economical fatality.

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