Yesterday, Angela Merkel has virtually approved the creation of the European Fund destined to combat the crisis. In her declarations, she suggested that the European Union makes sense only tied together, not separately, which should definitely help the PIGS stay in. In the other hand, the Greek government pledged to continue slashing its debt with 11.5 billion Euros. True, as a pre-condition of receiving another 31 billion euros in international loans – nevertheless, this is a massive effort from the Greek government.
Despite these other good news, I am still not convinced that the Greek financial problems (and together with it, the Eurozone financial crisis) have completely passed the turning point. First of all, there is still a strong opposition from the German Bundesbank and the Germany’s lands to further contribute to re-financing Greece’s debt. In this respect, Mrs. Merkel is loosing her power grip slowly, but certainly. She will sometime have to concede that the task of getting Greece back on line is too big for Germany only. France and other countries should contribute too, and not leave Germany alone in coordinating this.
Secondly, the resistance to changes in Greece itself has increased a lot. Yesterday’s general strike in Athens has again paralyzed a city which needs taxes and business more than oxygen. The Greeks seem unwilling to accept further cuts – and it is true that taxation in Greece has become painful after three years of consecutive increases. Further cutting jobs in the public sector seems unavoidable, yet the government does not want to do this. It is understandable – the extra-jobless people will add scarves to an already heavily battered economy.
Thus, the Greek financial tragedy is far from over – and the Eurozone crisis far from leaving its shores. I would say the financial crisis in Europe looks now like a constant storm – and the more it stays, the irreversible damage will do…