Greece Faces Severe Economic Crisis Over Public Debt
Within the Eurozone Greece has the highest ratio of public debt to GDP, currently at 125%, prompting Fitch to lower the nation’s credit rating. Other rating agencies are likely to follow. The Greek stock market is in a tailspin, while Athens is coping with both an acute financial crisis and social unrest, as a wave a riots has broken out to mark the anniversary of a previous violent outburst.
The level of public debt in Greece is clearly unsustainable. The question being asked is if the Eurozone will bailout the Greek government. Such a policy move is not likely to be well received by the taxpayers in other Eurozone economies with lower debt to GDP ratios, namely Germany and France. More importantly, the dismal economic and financial crisis in Greece, compounded by ruinous public debt problems, follows on the heels of the debt conundrum facing Dubai World. In addition, other Eurozone economies face looming public debt crises in the not too distant future, including Ireland, Spain and Portugal.
Is the next bubble to burst in the global economic crisis a string of sovereign debt crises? Readers of my report, “Global Economic Forecast 2010-2015: Recession Into Depression,” are aware that I project a catastrophic sovereign debt crisis afflicting both the United States and the UK by 2012.
