Heading for the europocalypse?
THE EUROPEAN debt crisis keeps getting worse despite a series of attempts to bail out debt-wracked countries in the eurozone, the 17 countries that share a common currency.
As Greece was preparing to hold elections on June 17 that ultimately returned pro-austerity parties to office, Spain became the new crisis flashpoint. Banks hobbled by a housing bust turned to the European bailout funds for a credit line of $125 billion.
But because those funds will be added to the total amount it owes, the Spanish government’s debt could hit 90 percent of gross domestic product, further weakening an economy suffering 24 percent unemployment and already expected to shrink by 1.7 percent this year. Spain recently had to pay a 7 percent interest rate to borrow over 10 years, compared to the 1.5 percent or less paid by Germany.
Desperate to buy time to avert a financial meltdown, eurozone country leaders were set to meet June 28 to propose a long-term plan for some sort of banking and/or fiscal union to shore up weaker economies. But Germany Chancellor Angela Merkel remained adamant that her country couldn’t afford to bankroll the effort.