Euro Crisis Deepens

The IMF is calling on Greece to refinance their debt. The growing realization that despite the bailout of €110 billion (US $158.5 billion), holders of Greek sovereign bonds will have to take losses.

Indeed, the most recent analysis by the European Commission, the IMF and the ECB on the issue of whether Greece will be able to refinance its debts by itself came to an alarming conclusion. The study found that the country's economy is contracting more than previously feared and that one of the main causes behind the contraction was the harsh austerity measures that the government has been forced to introduce in return for receiving outside assistance. As a result, the public deficit in Greece has climbed even higher than previously assumed.

The article in Der Spiegel concludes, "Indeed, on the whole, those in charge of rescuing the euro in Brussels and Europe's capitals have done a poor job."

The European Central Bank (ECB) warns that restructuring would hit banks that hold a lot of Greek debt hard. And that includes the ECB who bought up several billions of Greek sovereign debt. Greece is paying between 5 and 6 percent for the loans. There are still worries about Spain and now Beligum needing bailouts. Belgium is in the top fifth of over-borrowed nations globally.

As with several Mediterranean countries, Belgium was a huge beneficiary of joining the euro (it was the first to do so) because the implicit German guarantee allowed heavy borrowing at much lower interest rates.

Source: Business Insider (July 2010) that notes that "Much to the dislike of most politicians across Europe, Brussels is the de facto Federal Capital." Some 40% of the population comes from outside Belgium as bureaucrats and lobbyists from all over Europe.

Belgium has been without a government for 302 days. NPR