New Turn in the Euro Zone Financial Crisis
By Nick Beams
November 03, 2012
The eurozone financial crisis is set to deepen following this week’s release of debt projections for the Greek economy. Budget estimates show that instead of peaking at 167 percent of gross domestic product, as predicted last March when the so-called bailout package was put in place, the debt ratio will hit 189 percent this year, rising to 192 percent in 2014 — well above the worst case scenarios of just eight months ago.
With the Greek government expected to effectively run out of money by November 16, the eurozone crisis is certain to be a major issue at the G-20 finance ministers’ meeting beginning in Mexico City on Sunday. The German government’s refusal to make available any more money means that threat of a Greek default and a full-blown financial breakdown is back on the agenda.
On the eve of the meeting, German Finance Minister Wolfgang Schäuble insisted that Greece and other highly-indebted members of the eurozone had to continue with austerity programs. In a bid to deflect criticism from other major powers, he said the G-20 should not focus exclusively on the eurozone but should direct attention to the “fiscal cliff” in the US — the massive spending cuts to be initiated after the presidential election — and the mounting debt problems in Japan. “The United States and Japan bear as great a responsibility for (ensuring stability) as we Europeans,” he stated.
The latest figures establish that the austerity program of the “troika” — the European Union, the European Central Bank and the International Monetary Fund — has created an economic catastrophe, the like of which has not been seen since the Great Depression of the 1930s.
Greek gross domestic product has fallen by a cumulative 21.5 percent since its peak in 2007 and is expected to decline by a further 4.5 percent next year. Such is the extent of the economic contraction that total government revenue from all sources will not even cover the interest rate payments on international loans. If any further “aid” is forthcoming or loan terms are extended, it will be designed to ensure the continued flow of funds to international lenders, but will not alleviate the economic situation in Greece.
The Greek catastrophe is only the sharpest expression of a crisis that is spreading through the eurozone.CONTINUE: [link to www.globalresearch.ca]