News / Economy

Europe Scrambles to Contain Debt Problems

French finance minister Francois Baroin, right, listens to U.S. treasury secretary Timothy Geithner, left, during talks in Marseille.  Finance Ministers from the Group of Seven leading economies gathered in France amid jitters about Europe's debt crisis a
French finance minister Francois Baroin, right, listens to U.S. treasury secretary Timothy Geithner, left, during talks in Marseille. Finance Ministers from the Group of Seven leading economies gathered in France amid jitters about Europe's debt crisis a

French, German and Greek leaders are scheduled to hold a conference call Wednesday on how to contain Europe's deepening financial crisis that also is triggering alarm in other continents.

The call by leaders of Europe's two largest economies - France and Germany - to its weakest, Greece, underscores deepening worries about the region's financial troubles.

It comes ahead of a Friday meeting by finance ministers from the 17 nations sharing the euro currency to address a debt crisis that began with Greece, Portugal and Ireland, and now risks dragging in Italy and Spain.

U.S. Treasury Secretary Timothy Geithner is attending the talks for the first time, amid signs the crisis might also spread overseas.

In remarks to American news station CNBC, Geithner said European leaders are aware they need to do more to earn international confidence.

Fabian Zuleeg, chief economist at the Brussels-based European Policy Center, says the United States is right to be concerned. "The intervention from the U.S. has also shown, at least a risk that the stability of the financial system as a whole - the global financial system - might be under threat again," he said. "That we might have a financial situation where a possible default of Greece might have knock-on effects around the world as well."

On Wednesday, Italy's lower house approved a new austerity plan that would cut the country's deficit by more than $70 billion over three years. But underscoring market fears, Rome was forced this week to sell bonds at record interest rates.

In another signal of market jitters, the Moody's rating agency downgraded two major French banks that are large holders of Greek government bonds.

Greece is under pressure to make good its austerity promises in return for getting more rescue funds. But analysts believe European governments sharing the euro currency also must agree to closer economic unity if the eurozone is to remain viable.

In remarks before the European Parliament Wednesday, European Commission President Jose Manuel Barroso said the commission will propose creating "eurobonds" as a way for eurozone governments to jointly guarantee their debts.

"I am convinced we need a deeper and more results-driven integration. And let me be clear, this has to be within the community system. A system based purely on intergovernmental cooperation has not worked in the past and will not work in the future," Barroso stated.

Chances that the eurozone might fall apart were once dismissed as unlikely.

Now, analysts like Zuleeg say it's a real possibility. "I don't think a very orderly exit of a single country is a very likely scenario. I think it is much more likely that we either have the eurozone holding together or we get a chaotic process where other countries come under pressure as soon as one of the countries, such as Greece, says they can no longer pay their debt," he said.

Experts say economic growth also is needed for Greece and other debt-strapped nations to rebound.

But last week, the Paris-based Organization for Economic Cooperation and Development downgraded its growth estimates for the euro area and the Greek economy has shrunk this year.

You May Like

Ebola Death Toll Nears 5,000 as Virus Advances

West Africa bears heaviest burden; Mali toddler’s death raises new fears More

Jordan’s Battle With Islamic State Militants Carries Domestic Risks

Despite Western concerns that IS militants are preparing a Jordanian offensive, analysts call the kingdom's solid intel a strong deterrent More

Asian-Americans Assume Office in Record Numbers

Steadily deepening engagement in local politics pays off for politicians like Chinese-American Judy Chu More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video Comanche Chief Quanah Parker’s Century-Old House Falling Apart

One of the most fascinating people in U.S. history was Quanah Parker, the last chief of the American Indian tribe, the Comanche. He was the son of a Comanche warrior and a white woman who had been captured by the Indians. Parker was a fierce warrior until 1875 when he led his people to Fort Sill, Oklahoma, and took on a new, peaceful life. As VOA’s Greg Flakus reports from Cache, Oklahoma, Quanah’s image remains strong among his people, but part of his heritage is in danger of disappearing.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7893
JPY
USD
107.68
GBP
USD
0.6238
CAD
USD
1.1214
INR
USD
61.185

Rates may not be current.