Greece's Dithering Is Hurting Everyone
Fears that Greece won't accept a new bailout deal are having a chilling ripple effect from Greece to Western Europe to the United States.
Fears that Greece won't accept a new bailout deal are having a chilling ripple effect from Greece to Western Europe to the United States. Political leaders of the debt-ridden country have yet to accept deeply unpopular reductions in public wages and other actions linked to a bailout from the European Union and the International Monetary Fund. With only weeks left until the country defaults, Greece's prime minister Lucas Papademos postponed a meeting Monday of leaders from the conservative, socialist, and far-right parties. Here's who's been impacted:
The U.S. As The Wall Street Journal reports, though Greek leaders did agree to cut 15,000 public-sector jobs by the end of the year, the meeting's postponement until Tuesday rattled leading blue chip stocks in the U.S. "Seven of the S&P 500's 10 sectors finished in the red Monday, led lower by materials and financials. Travelers fell 1.3%, while Pfizer and Boeing each fell 1.2%, leading blue chips lower." Other sliding corporate stocks include Humana, Sysco, and Consolidated Communications Holdings. Jerry Webman, chief economist of OppenheimerFunds, tells the newspaper that recent gains in the market are no match for sour news in Europe. "You do get up this morning and see again this stalemate or case of brinksmanship in Europe, and you remember that the fairly tepid recovery we're seeing in the U.S. and other places means it's vulnerable. When you don't have a lot of momentum, it's easier to stop it."
Germany Chancellor Angela Merkel, whose country is the primary paymaster of Greece, unleashed on the small debt-ridden country Monday. "I honestly can't understand how additional days will help. Time is of the essence. A lot is at stake for the entire euro zone," she said. According to Reuters, "Merkel expressed the exasperation spreading among euro zone leaders at seemingly endless arguing in Athens that has yet to produce a definitive acceptance of the austerity and reform conditions demanded by the lenders."
France The political fortunes of French President Nicolas Sarkozy have been devastated by Greece's drag on the French economy, causing some to openly speculate that the conservative politician will be the "next domino to fall" following prime minister upheavals in Britain, Italy, Greece, Spain, Portugal, and Ireland. Today, the French president warned the indebted nation that "The situation of Greece must be resolved once and for all.” As The Globe and Mail's Eric Reguly writes, "Now he’s on the defensive, trailing in the polls, and faces being trounced by an unlikely candidate, the bland (in comparison) François Hollande of the Socialist Party, while Marine Le Pen, of the xenophobic, anti-euro, extreme right Front National party, is coming on strong,"
Europe at large As Reuters reports, European stocks dropped sharply today on fears in Greece: "The FTSEurofirst 300 index of top European shares closed down 0.14 percent. Global stocks measured by MSCI dipped less than 0.1 percent. The euro pared some losses as its earlier decline reached key technical levels, prompting investors to cover their short positions. The single currency fell to a low of $1.3026 according to Reuters data and was last down 0.2 percent at $1.3125." Brian Dolan, chief currency strategist at Forex.com told the news agency, "Headlines out of Europe are affecting sentiment on the euro. Earlier, we had hit stop losses in the euro and we saw it trim some losses. But it's more of the same."