Everyone is worried that Greece might default on its national debt. That's really not news. By one estimate, in the 180 years since it gained its independence from the Ottomans in 1832, the country has been in default or restructuring for half this period. The news is that this time, Germany is willing to bail Greece out.
Throughout the euro-zone crisis, it has been conventional wisdom to regard the Germans as narrow-minded, ungenerous and dogmatically wedded to prescriptions of austerity to treat Europe's problems. These criticisms are vastly overstated.
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Everyone is worried that Greece will default on its national debt. That's really not news. By one estimate, since it gained its independence from the Ottomans in 1832, Greece has been in default or restructuring for half this period. The news is that this time, Germany is willing to bail it out.
Throughout the euro-zone crisis, it has become conventional wisdom to regard the Germans as narrow-minded, ungenerous and dogmatically wedded to prescriptions of austerity to treat Europe's problems. Those criticisms are vastly overstated. Consider that Germany is being asked to take its taxpayers' money–in a democracy–and use it to bail out a country like Greece, which is guilty of mismanagement, poor competitiveness and financial fraud. And it has said yes! In return for this, Germans are being called Nazis in Greek newspapers.
Read more about the German reaction and the debate over whether the U.S. needs austerity measures right now, over at my TIME column.
Can a president who's elected on a promise to be normal deal with Europe in the throes of a crisis of abnormality?
With France's Francois Hollande taking office, an all-star panel debates "Mr. Normal" and how the politics will reverberate across Europe in this excerpt from the past week's "Fareed Zakaria GPS." Watch the video above.
And is Germany taking too much of the anger? Here's what Josef Joffe, Die Zeit editor, had to say:
ZAKARIA: Josef Joffe, you know that much of the rhetoric and the anger is directed at Germany. The idea is the Germans are forcing all this austerity on Europe, European governments having forced to cut their budgets. It's causing misery, unemployment. It's even causing bigger budget deficits.
But you've sort of defended the German position, isn't it fair to say?
JOSEF JOFFE, EDITOR, DIE ZEIT: Well, I mean, Angela Merkel makes for a nice whipping boy for problems which are deeply rooted in the societies that we've just heard about [France, Greece, Spain]. ... FULL POST
Editor's Note: The following text is from GlobalPost, which provides views — important, moving or just odd — from around the world.
By Paul Ames, GlobalPost
It was the scenario never to be named — a prospect so terrible that the mere mention of it would conjure up doom and destruction for the eurozone.
In the last few days, however, the risk that Greece could be forced out of the currency bloc has become too real to be ignored. The once-taboo subject has become an unavoidable topic of conversation among Europe’s financial leadership.
By Tim Lister, CNN
Greece may have given us the word democracy and many of the principles of civil society. But now it is "the sick man of Europe," and the people of other European democracies are asking whether it's worth saving with billions more dollars of their money. Put crudely, their argument is this: So what if Greece slides ignominiously out of the eurozone? FULL POST
The U.S. economy is currently on autopilot: A sharply polarized Congress and a tapped out Federal Reserve can't do much more to stimulate it this year.
But the economy may still hit turbulence after voters in France and Greece delivered a resounding anti-austerity message over the weekend to their governments.
That message, say analysts, is likely to have implications for the United States that extend from its fragile economy to its planned withdrawal from Afghanistan.
Hollande swept to victory Sunday, becoming France's first-left wing president since Francois Mitterand left office in 1995.
That was followed by news that voters in Greece dealt major blows to the country's two most established parties in parliamentary elections, leaving no party with anything approaching a majority.
The message from voters in both countries appeared to be the same: The current policy of deficit-cutting, reduced spending and cuts to benefits and public services is unacceptable.
The election results leave in question what happens now to the eurozone and its debt crisis. France is a key player in plans to navigate it. And Greece is a recipient of bailout by the European Central Bank that requires the government to slash spending.
Editor's Note: The following is reprinted with the permission of the Council on Foreign Relations.
Bank of Greece Governor George Provopoulos warned Greek political leaders that if the country were to abandon its strict austerity path following general elections on May 6, it could potentially force Greece to leave the eurozone (WSJ). His call comes amid mounting social unrest in Greece over government cutbacks and fierce opposition to the second EU bailout program agreed to by technocratic Prime Minister Lucas Papademos last month. The unrest is indicative of a larger EU debate over the balance of austerity and growth measures needed to combat the ongoing eurozone sovereign debt crisis. Meanwhile, the Greek central bank predicted the economy would contract by around 5 percent for 2012. FULL POST
Editor's Note: The following is reprinted with the permission of the Council on Foreign Relations.
Greece announced it has succeeded in a debt restructuring deal with private sector lenders that will help the country avoid default. The finance ministry said creditors holding nearly 86 percent of debt subject to Greek law and 69 percent of creditors holding of the country's international debt accepted the debt swap arrangement (DeutscheWelle), taking major losses on their investments.
The deal clears the way for the release of bailout funds (FT) from Europe and the International Monetary Fund. Finance Minister Evangelos Venizelos expressed thanks to creditors, saying they helped bring "Greece to a path of sustainable growth." The aim of the debt swap was reduce by more than half Greece's 206 billion euros in privately held debt, necessary to help cut the country's debt level to 120.5 percent of GDP by 2020. FULL POST
Editor's Note: Mohamed El-Erian, CEO and co-CIO of PIMCO, is the author of When Markets Collide. For more from El-Erian, visit Project Syndicate or follow it on Facebook and Twitter.
By Mohamed El-Erian, Project Syndicate
Let me set the scene: an increasingly discredited economic policy approach gives rise to growing domestic social and political opposition, street protests and violence, disagreements among official creditors, and mounting concerns among private creditors about a disorderly default. In the midst of all of this, national leaders commit to more of the same harsh austerity measures that they have been unable to implement for two years. Official creditors express skepticism, in private and public, but hold their collective nose and get ready to disburse yet another tranche of money into what they fear is a bottomless pit.
Sound familiar? It should, but not just because it encapsulates Greece today. It is also what Argentina faced in 2001. Unless Europe reflects on key lessons from that experience, the parallels that extend to Greece may also end up including a financial meltdown, a deep output collapse, and social and political turmoil. FULL POST
Editor's Note: The following is reprinted with the permission of the Council on Foreign Relations.
Luxembourg Prime Minister Jean-Claude Juncker, head of the Eurogroup of eurozone finance ministers, cancelled a critical meeting focused on releasing a $170 billion EU-IMF bailout package for Greece. Despite the Greek parliament's passage of an approximately $4.3 billion austerity package on Sunday, Juncker said Athens had not accounted for an additional $427 million in savings demanded by Brussels. At the same time, the leaders of Greece's political parties had failed to provide the necessary assurances to EU leaders (DerSpiegel) that they would follow through on implementing the agreed austerity measures, Juncker said.
However, Greek conservative leader Antonis Samaras, who has been highly critical of further budget reductions, responded that he would send a letter of commitment to Brussels (Reuters) by the end of today. The Greek government must also complete a bond swap deal with private bondholders by Friday as part of the bailout package.
© 2011 Cable News Network. Turner Broadcasting System, Inc. All Rights Reserved.
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