The possibility of Greece defaulting on its debt and setting off an economic crisis not only in the euro zone but throughout the world again looms. While acknowledging Greece’s efforts to impose austerity measures and privatize state assets to raise funds, European finance ministers have decided to delay giving Greece the next $8 billion installment of a bailout payment until October. Luxembourg prime minister Jean-Claude Juncker had called the meeting of the eurogroup ministers in Wroclow, Poland, on Friday.
The Greek government responded with “incredulity,” says the Guardian. Greek authorities say their country will run out of money by mid-October and are starting to make plans to lay off public sector workers.
EU Finance Ministers Dismiss Geithner’s Advice
US Treasury Secretary Timothy Geithner had been invited to the meeting to offer advice about fixing Europe’s debt crisis and financial problems, says the New York Times. But his suggestions to do more — to add a large enough amount of money to the 440 billion euro European financial stability facility (EFSF), so the EU can prop up banks and nations harnessed with debt — were met with the equivalent of a cold shoulder. Maria Fekter, the finance minister of Austria, said, “I found it peculiar that, even though the Americans have significantly worse fundamental data than the euro zone, that they tell us what we should do.” As the Guardian relays,
[Fekter] said there had been particular disagreement over suggestions that Europe should commit more money to fighting the crisis. When German finance minister Wolfgang Schäuble explained that would not go down well with taxpayers and that the only way to fund it would be a financial transaction tax, Geithner ruled any such tax out. “In these countries, there is a desire for a transaction tax,” Fekter said. “[Geithner] ruled that out.”
Ian Bremmer, president of Eurasia Group, a political consulting firm, says that the US now has “diminished credibility” after the deadlocked negotiations about the US debt ceiling in August. Sheila C. Bair, a senior advisor at the Pew Charitable Trusts and a former chairwoman of the Federal Deposit Insurance Corporation, said that a “joint effort” between the US and China might help to persuade Europe.
A larger meeting of EU finance ministers will take place today, Saturday, September 16, to address the possibility of not only Greece but other southern states — Portugal, Ireland, Spain — facing default. Worries of Greece defaulting have led to French bank shares losing over 50 percent of their value since July. Some French banks have had their ratings downgraded by Moody’s and Italy fears the same.
Mounting Financial Problems Taking a Toll in Greece
Concerns about the accuracy of Greece’s financial situation as depicted by its leaders are again arising. The Guardian says that two members of the government’s statistics board have resigned while “another was quoted as alleging that 2009 deficit data had been artificially inflated in order to ensure bailout funds would be forthcoming.”
Meanwhile, the Wall Street Journal reports that Roche, the Swiss drug company, has ceased to deliver its drugs for cancer and some other diseases to state-owned hospitals in Greece that have not been able to pay their bills. Roche has been “boosting” deliveries to Greek pharmacies, who have been making their payments; patients can purchase the medications they need at the pharmacies and bring them to hospitals to be administered intravenously, if necessary:
Greek hospitals have large debts to many drug companies, according to the Hellenic Association of Pharmaceutical Companies, or SFEE. As of June 30 this year, Greek’s state-financed hospitals had paid for just 37% of the €1.9 billion ($2.62 billion) worth of drugs delivered by SFEE member companies in the 18 months to June, 2011, the organization said in a recent report.
Roche is also considering halting deliveries to hospitals in Spain, a further, concrete sign of how the debt crisis is, little by little, taking its toll on Europeans’ daily lives.
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Photo of 1 Greek euro by dullhunk