The unfolding debt drama of Greece could be the script for another Greek tragedy. As written in the Wall Street Journal, it begins, "The Greek Tragedy That Changed Europe"- Plutus, the Greek god of wealth, did not have an easy life. As the myth goes, Plutus wanted to grant riches only to the "the just, the wise, the men of ordered life." Zeus blinded him out of jealousy of mankind (and envy of the good), leaving Plutus to indiscriminately distribute his favors.
Modern-day Greece may be just and wise, but it certainly has not had an ordered life. As a result, the great opportunity and wealth bestowed by European integration has been largely squandered. And lower interest rates over the past decade—brought down to German levels through Greece being allowed, rather generously, into the euro zone—led to little more than further deficits and a dangerous buildup of government debt.
Now Plutus wants his money back. Europe is entering unprepared into a serious economic crisis—and the nascent global recovery could easily collapse due to the unsustainable and Ponzi-like buildup of government debt in weaker countries."
Now Greece is teetering on the brink of bankruptcy. The European Union has formally announced that a bailout for Greece will be available if needed. EU economic leaders Germany and France and the European Central Bank have backed the bailout plan. Portugal, Spain and Italy have their problems of national debt and the Greece bailout could give the template they need to queue at EU headquarters in Brussels. Herman Van Rompuy, the EU's new president, has already called for the creation of an "economic government" that shifts responsibility for economic planning from national authorities to the "EU level".
In a parallel move, European Commission chief Jose Barroso said Brussels has treaty powers allowing it to take the reins of economic management. "This is a time for boldness. I believe that our economic and social situation demands a radical shift from the status quo. And the new Lisbon Treaty allows this," he said. "Economic policy isn't a national, but a European matter. No modern economy is an island. When a member state doesn't make reforms, others suffer because of that."
The headline of an article in the British paper The Telegraph reads, "Failure to save East Europe will lead to worldwide meltdown- The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point."
Greece is one of 16 countries that have so far adopted the 10-year-old euro currency, and these are nervous times for the EU Commission and the financial markets.