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April 27, 2010

Debt Crisis Spreads Beyond Greece

U.S. stock market indexes were mixed in Wednesday's trading.  The Dow Jones Industrial Average rose 0.5 percent (53 points) to end at 11,045.  The S&P 500 advanced nearly 0.7 percent (eight points) to finish at 1,191 but the NASDAQ was essentially unchanged to close at 2,471.  

European stock markets were down at the close of trading as concerns grew about the debt crisis that affects Greece, Portugal and now Spain.  London's Financial Times 100 index lost 0.3 percent (17 points) to end at 5,587.  The CAC-40 in Paris fell 1.5 percent (58 points) to hit 3,787, and the DAX in Frankfurt was off 1.2 percent (75 points) to reach 6,084.

Earlier in Asia, Tokyo's Nikkei index plunged 2.6 percent (288 points) to finish at 10,925.  Hong Kong's Hang Seng index lost 1.5 percent (312 points) to finish the day's trading at 20,949.

European and global finance leaders are stepping up efforts to reach agreement on a bailout package for Greece.  The debt crisis in Athens has caused worries about a Greek financial meltdown that could suck in other European nations and affect all that use the euro as their common currency.

The heads of the International Monetary Fund and the European Central Bank were in Berlin Wednesday for talks with Chancellor Angela Merkel and other senior officials. The aim: to get agreement on a bailout package for Greece.

Speaking to reporters, IMF chief Dominique Strauss Kahn said he remains confident a solution will be found.

"It asks from the Greek government very bold measures, but they're ready to take it," said Kahn.  "I'm confident from this side it will work very rapidly.  We also need to restore confidence in the solidarity of the European Union to provide - especially [to] the Eurozone - to provide the resources along with the IMF.  And if all this goes together rapidly, I'm really confident that the problem will be fixed."

Greece has been in negotiations with EU member countries and the IMF to secure a bailout - money that would allow it to pay debts coming due in time to avoid having to default.  

In return Greece is under pressure to restructure its economy and implement austerity measures.

That has average Greeks worried, confused and angry, says reporter Anthee Carassava, who spoke with VOA from Athens.

"Greeks just simply do not know what the next day will spell for them, what this EU-IMF rescue package  is all about, what it will actually mean for their pockets," said Carassava.

Disgruntled public-sector workers went on strike in Greece Wednesday to protest against the cutbacks.  A daylong general strike has been called for next week.

Opinion polls show the majority of Greeks are against an IMF-EU bailout, seeing it as foreign interference.

Worries about the Greek economy's potential meltdown have sent jitters through world markets.  And, says Dominique Strauss Kahn, help is imperative because the Greek crisis could spread.

"We have to do this because it's a problem that is today in Greece, but if we don't fix it in Greece it may have a lot of consequences on the rest of the European Union," added Kahn.

Germany, as the biggest potential contributor, has shown reticence about a bailout.  There is little domestic public support for lending money to Greece.

A joint EU-IMF aid package for Greece is put at $60 billion, but some European officials said Wednesday the full cost could be much higher, reaching about $160 billion over three years.