Delayed bailout payment to Greece deepens concern in Europe, U.S.
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Kai Ryssdal: Wall Street managed to salvage an up day, as we’ll tell you at the appropriate moment. But European markets had no such luck.
Traders overseas today were smacked with news that finance ministers are going to delay giving Greece its next installment of bailout money. And without a whole lot of notice, either. They’d been expected to sign off on a new $11 billion loan for Athens next Thursday. But the meeting in question was canceled once Greece said it’s not going to be able to meet deficit reduction targets after all.
From Paris, John Laurenson reports.
John Laurenson: Whatever came out of that meeting in Luxemburg, it was not the firm unanimous show of support for Europe’s sickest economy that markets around the world hoped for.
Milken Institute economist Jim Barth says European skepticism about the wisdom of another bailout is on the rise — whether or not Europe’s leaders admit it publicly.
Jim Barth: I think that’s indeed a question that comes up in any behind-the-door discussions. One doesn’t want to throw good money after bad.
When the eurogroup first agreed this bailout back in July, Germany in particular made it plain that Greece would have to play ball if it was going to get its money. This week’s Greek admission that they can’t implement the deficit-cutting measures the eurogroup and the IMF are demanding is not what Germany wants to hear.
But, says Athens University economics professor Yanis Varoufakis, the Greek government does not have the authority to push these measures through.
Yanis Varoufakis: We have a political system which has lost its capacity to persuade the electorate regarding its intentions or its skills.
So now a stymied Greek political system has been met with a stymied European bailout. Jim Barth says the consequences for the U.S. can only be bad.
Barth: If there’s some restructuring or write-down of the debt of Italy or Spain, that could lead to a recession in Europe, and that in turn could spill over adversely to the United States, and even a country like China.
Now investors will have to wait and see whether the eurozone economies will hand out the money Greece so desperately needs in November.
In Paris, I’m John Laurenson for Marketplace.
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