The eurozone crisis: Back with a vengeance?
posted at 5:21 pm on April 12, 2013 by Erika Johnsen
Not that it ever left, of course, but things do seem to be going especially poorly lately. Greece’s unemployment rate rose to a new record high of over 27 percent (ouch), multiple countries are struggling to meet their budget targets, and the troubles just keep coming in from all sides:
Europe’s finance ministers meeting in Dublin on Friday are facing a renewed crisis on multiple fronts,with a backlash against austerity acting as a gloomy backdrop for negotiations over bailout extensions for Portugal and Ireland, while tackling Cyprus’s botched bailout and growing worries about Slovenia.
Investors, increasingly aware of the euro zone’s disarray, will be closely watching the results of that meeting.
On Thursday, Cyprus confirmed that the cost of its troika-initiated bailout had surged to 23 billion euros ($30 billion) from 17.5 billion euros, further jeopardizing its moribund economy. It has also confirmed that it may have to sell most of its gold reserves to raise about 400 million euros to finance its part of the bailout. …
Slovenia’s leaders are trying to avoid requesting financial aid and the onerous terms those loans are likely to come with. Earlier this week, the Organization for Economic Cooperation and Development (OECD) said the central European economy risks a “deep recession” and a “severe banking crisis.”
And the euro-leaders did end up giving Ireland and Portugal some leniency in paying back their bailout loans, with the supposed idea of easing the burdens on their respective economies and bringing them back toward financial sustainability:
The decision to extend the loan repayment schedules for Ireland and Portugal was backed Friday afternoon by the finance ministers of all 27 EU countries. Irish Finance Minister Michael Noonan said the approval was “a very positive development and marks another significant step on Ireland’s and Portugal’s journey to a full and sustainable return to the markets.”
Ireland holds the six-month rotating presidency of the European Union, and the ministers are meeting in historic Dublin Castle, once the seat of the country’s English overlords and, later, of the Irish government itself.
The repayment extensions are intended to ease financial pressure on the countries, helping them resume long-term bond sales when their bailout loans run dry. Ireland’s loans run out later this year; Portugal’s in 2014.
Er, I hate to be the pessimist here, but why am I not infused with confidence? One of the main reasons the eurozone is even in this mess is because so many of their respective governments have demonstrated themselves incapable of paying of their debts. How much longer can all of this financial reshuffling sans substantive problem-solving go on avoiding the mega-meltdown?