Europe's debt crisis simmers

Greek teachers protesting in Athens, 11 Jul 13 Athens: Teachers are angry about cuts - as are their public sector colleagues

To visit Rome is to be reminded of just how fragile the current calm in the eurozone is.

This morning the construction industry held its annual conference. Construction accounts for 15% of Italy's GDP. One company owner said the industry was facing its gravest crisis since World War II: 11,000 companies have collapsed, with a loss of 690,000 jobs.

There are also new threats to the governing coalition. Silvio Berlusconi - whose party is in the coalition - is fighting to avoid a ruling by the Supreme Court at the end of the month that could see him barred from public office. He maintains the legal case against him (he was convicted of tax fraud) is politically motivated. Yesterday his party disrupted proceedings in parliament in protest.

One senator said openly that if the court ruled against Berlusconi the party would leave the government, possibly triggering fresh elections. One Italian paper said the coalition was hanging by a thread.

Only this week a credit ratings agency downgraded Italy to two levels above junk status.

'Ready to revolt'

In Greece the coalition will struggle to get through parliament the new measures which will enable the next tranche of bailout money to be paid. The laws have to be passed by next week.

Nearly a dozen coalition MPs are raising objections to the deal, particularly the moves to reduce public sector staff by 12,500. A general strike has been called for next week. Police officers have been protesting and occupying offices over the loss of jobs.

Today the Greek unemployment rate went up to 26.9%. Between 700 and 1,000 people are laid off each day. I was struck by a comment made by someone who has been unemployed for two years. "Things are really terrible, terrible. We are all ready to revolt. We are on the edge. There is hunger everywhere." No one knows whether such despair will be reflected on the streets.

It is accepted that Greece has a funding gap of 4bn euros (£3.4bn; $5bn) over the next 12 months. That might require further belt-tightening. Almost certainly Greek debt will have to be, once again, restructured. At some stage German taxpayers will have to be told the truth - some of the money they loaned towards the Greek bailout will not be repaid.

Southern malaise

In Spain, Prime Minister Mariano Rajoy is facing a fresh round of allegations that he accepted illegal payments. He denies the reports, but the corruption scandal is deepening.

In Portugal the president has called on the three main parties to agree a "national salvation pact" around the current reform/austerity programme. But the political consensus has weakened. Many now say that the Brussels/Berlin strategy - with its emphasis on deficit reduction - is leading to stagnation. There are increasing doubts that next year Portugal will be able to return to the markets to fund itself.

In Cyprus, the economy has slumped badly after the bailout and very little progress has been made in restructuring the Bank of Cyprus.

Southern Europe is struggling, hoping against hope that in the final quarter of this year growth will return. It remains clear, however, that much can still disturb the superficial calm in Europe.

Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

Greek crisis deepens amid EU tensions

As time pressures mount, a deal to settle the Greek bailout crisis still hangs in the balance.

Read full article

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  • rate this

    Comment number 188.


    --That was the week that was.

    --anybody remember ?

    --With all to lose --and only more of the same to win.

  • rate this

    Comment number 187.

    quietoaktree @186
    "there is no fear"
    A profound 'thought for the day'
    Without a substantive alternative, no heart for struggle
    People will keep heads-down, even in misery, hoping for up-turn
    Until 'they' go too far. And they always do
    A work-in-progress
    Rapid progress
    No human really in charge here, just Old Mammon
    Careless of human cost, even of survival

  • rate this

    Comment number 186.

    #182 Sally

    This blog will close in 15 minutes --no time to waste.

    #183 Exile

    -- Democracy will only function --if there is a reason.

    -- being guillotined is a good reason.

    with Communism gone --there is no fear --we are screwed.

  • rate this

    Comment number 185.

    Exile @183
    "a mouthful of air"
    The difference between 'communism' and 'democracy'?

    A funny line, but only if 'the joke' puts aside the costs of horror and misery and fear, past, and present and future, for millions and billions, the 'opportunity costs' also of those who never will be born if we so carelessly abandon the thought and effort of ages, towards real democracy, for equal partnership

  • rate this

    Comment number 184.

    174 Victoria

    "Please do whatever it takes to keep those horrible French films out of the USA"

    I'm sure Americans don't need our help as it should be supply and demand so some of you must like them

    Just like our kiddies can't seem to get enough of your hideous Hollywood blockbusters and we all have to suffer for it

    This trash has reduced everything to the lowest common denominator

  • rate this

    Comment number 183.

    OK , I got it.
    In 1978 on a visit to Hungary, I had/still have friends here, I made the following statement, 'What's the difference between communism & democracy'? Under communism you cant say what you want. In a democracy you can say what you want, but if you are ignored then the difference is 'a mouthful of air'.

  • rate this

    Comment number 182.

    "any facts ?"
    Are you serious? This goes back to 2011, and beyond:
    "a. Cypriot banks are exposed to Greek government bonds (GGB), which must be written down by approximately 50%...

    b. Cypriot banks are exposed to non-performing Greek private sector loans":

  • rate this

    Comment number 181.

    #179 Sally

    any facts ?

    "After merging with Greek bank Marfin in 2007 and coming under Greek management, Laiki in 2009 built up a large position in Greek bonds, which offered attractive interest rates."

    "The EU bars Greece from the essential process of bankruptcy, liquidating its debt."

    They want no debt --but Euro and EU

  • rate this

    Comment number 180.

    quietoaktree @177
    'giving Communism a second chance,
    better than giving such to Fascism,
    even if as in GDR…'

    Why must our choice be so limited, taking 'democracy' as having failed in sham, jumping from one to another frankly anti-democratic authoritarian refuge, missing the only logical and moral solution, in equal partnership, real democracy, all materially representative of all, securely free

  • rate this

    Comment number 179.

    Tic tok tic tok..

    The EU bars Greece from the essential process of bankruptcy, liquidating its debt. No, instead they're saddled with even more debt! They'll never repay, ever.

    And, if you think tiny Greece is bad, see Italy: who is forced to borrow to lend to even more insolvent Portugal, just as Cyprus was bankrupted, being forced to lend to Greece! The EU is a joke, you couldn't make this up!

  • rate this

    Comment number 178.

    sieuarlu @104
    "Dead wrong"?

    You list some aspects of your US inheritance - with reputational gloss - from "dynamic society" to "vast natural resources", maybe thinking my point 'against US', missing in fact friendly advice, for US as for all, from age & long reflection to youth & useful-but-short experience, to consider the meaning in 'conflict of interest'... on course to ruin people and planet

  • rate this

    Comment number 177.

    #176 Exile

    I agreed yesterday-- the world is in a mess.

    I suggested giving Communism a second chance, may be better than giving Fascism a second chance ( in progress).

    There were many things in GDR that today many living in the UK and USA would be thankful for. (personal knowledge)

    --they could not criticize.

    "The USA is nothing like the old GDR, but thats because criticism is allowed." ???

  • rate this

    Comment number 176.

    173 QOT
    It was your response, "--so with criticism one looses automatically --a job and health care etc. etc.etc." ?
    that confuses me..but I admit my query was confusing !!

  • rate this

    Comment number 175.

    165 Lucy

    "bell tolls louder for the EU economy"

    Could you just remind us how much "Quantitative Easing" ( newspeak for printing money) the US has indulged in?

    New York Public Debt Clock 12 Jul 2013:


    Population of the US is 316m
    each citizen's share is $52,937

    It increases by $2.37 billion per day since 2012

    Terrifying !

  • rate this

    Comment number 174.

    As an American I beg the Brussels regime to please, please listen to the French and protect their beloved film industry. Please do whatever it takes to keep those horrible French films out of the USA. I literally blush for the French that they can make such embarrassing cring-worthy movies and not realize it. They can keep them in France with our whole-hearted blessings:)

  • rate this

    Comment number 173.

    #172 Exile

    --I don´t understand what you don´t understand.

    I didn´t write

    ""The USA is nothing like the old GDR, but thats because criticism is allowed.""

    --you did !

    --- Perhaps a further clarification of that statement is in order ?

  • rate this

    Comment number 172.

    166 quietoaktree
    "The USA is nothing like the old GDR, but thats because criticism is allowed."
    --so with criticism one looses automatically --a job and health care etc. etc.etc. ?
    I dont understand your point.
    "-and USA and UK citizens are still spied upon"
    & French, Luxemburg, possibly everyone...

  • rate this

    Comment number 171.

    #167 LucyJ

    "This is something new+different in which it allows corps to legally sue both of our regulations in which it is basically giving corps
    the status of countries"

    --Then appears to be a further deterioration in individual Rights - when the Supreme Court ruled that businesses are ´individuals´

    -- Workers of the world unite ?

  • rate this

    Comment number 170.

    Marg: a universal free service

    I am not a European but I don't believe your service is free

    Obama fooled us good- he told us he would pass universal health care, then he passed mandated health care instead

    I don't believe health care should be free
    but universal health care is not free

    Ironic that the ones you depend on don't even have health insurance, isn't it?

  • rate this

    Comment number 169.

    pmk @133
    'unity would serve Europe', & US & world, IF "agreed upon" - not just 'by states' but by citizens, an informed public sustaining equal partnership

    On pmk@133: 'You're joking, Germany unite with Greece?'
    Whatever seriously agreed - with tax-respect - will work for a time. For permanence, the proposition must of course be equal partnership, between car-makers & tour-guides etc


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