Word: euro
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...crack down on the twin scourges of tax evasion and corruption. But during the years of plenty there was little external pressure for the country to mend its ways. Now, with Greece's public debt ballooning out of control and Greece accused of putting the integrity of the euro at risk, the stakes are higher. Greece must cut spending and raise more revenue or risk defaulting on its debt. (See pictures of the global financial crisis...
...remains to be seen whether the strong message of support will have the intended effect. The euro rallied early in the day but then fell 0.9%, to below $1.36, as traders criticized the lack of details in the rescue package. E.U. officials insist that although the specifics still need to be worked out, the agreement should end the speculation against the euro...
Speaking to the E.U. leaders attending the summit - including Angela Merkel of Germany, Nicolas Sarkozy of France and Gordon Brown of Britain - Van Rompuy said the 16 countries in the euro zone had a "shared responsibility" for economic stability and would take "coordinated and determined" action to safeguard financial stability. But Van Rompuy was also stern about what was expected from Greece: it must reduce its budget deficit (which now exceeds 12.7% of GDP) in an "effective and determined manner." Athens now faces stringent oversight as it attempts to balance its finances: after years of receiving dodgy statistics from...
Greece's task is massive. Its deficit is the biggest in the euro zone and four times larger than the 3% maximum permitted for members of the single currency. Frugal Germany, the E.U.'s traditional paymaster, was understandably reluctant to commit to underwrite any rescue pledge before securing a cast-iron commitment from Athens that it would put its finances in order. Earlier in the day, Otmar Issing, the German former chief economist of the European Central Bank, said the Greeks enjoyed "one of the most luxurious pensions systems in the world" and that it was unreasonable to expect German...
Nonetheless, it was unthinkable that the E.U. would sit idly by and watch Greek finances crumble a mere 11 years after the euro's birth. European leaders are keenly aware that the crisis is not restricted to Greece. If the nation were allowed to default on its debts, the bug could spread to other highly indebted euro-zone economies, like those of Spain and Portugal. At that point, economists have said, the euro itself could be endangered. But the E.U. sent a message on Thursday that it was not about to let that happen. Now it's banking...