The lead article in today’s New York Times, “Revolt in Greece on Bailout Vote May Oust Leader,” shows that theoretical decisions agreed to in faraway Brussels to save the Euro, and the austerity program they imposed on the Greek people, can backfire when the people themselves express their opinion on the matter.

The surprise decision by the Prime Minister of Greece, George Papandreou, to hold a referendum on the terms imposed by, among others, Angela Merkel of Germany and Nicolas Sarkozy of France, was originally initiated to get the imprimatur of the Greek population to provide political cover for what will be a very difficult transition requiring sacrifice by the public. It appears to have backfired by resulting in the potential fall of the government instead.

Even worse, the inability to get the Greeks to abide by an austerity program to justify their bailout could have a major impact on the possibility of getting larger economies such as Spain and Italy to do the same. Of course, the financial markets weren’t too pleased about any of this.

The no-confidence vote on Mr. Papandreou is scheduled for Friday. He now faces opposition from both sides of the spectrum — Socialists who think he is abandoning the welfare state and those who think he hasn’t done enough to shore up the economy. Both are displeased with the referendum he has proposed.

The lead article in today’s New York Times, “Europe in Accord on Basics of Plan to Save the Euro,” provides welcome news to the United States as well since our markets had been gyrating wildly due to the crisis.

The resolution, forcing banks to take a “haircut,” means they will only receive 50 percent of the face value of their Greek bonds, far less than the 21 percent they had previously agreed to (market price is 40 percent of value). In addition, banks will be required to raise about $150 billion in order to increase the percentage of their safe assets to about 9 percent. This amount is considered sufficient to ward off any concerns about their solvency in case of a sovereign default.

Meanwhile, Germany stepped up to the plate, too, with the Parliament approving an expansion of the bailout fund to $1.4 trillion, about double its current level. Chancellor Merkel framed the choice as Germany’s biggest chance to respond positively to a crisis since World War II.

One hopes that the above actions will be sufficient to put the sovereign debt crisis to a rest. Italy still remains oddly intransigeant regarding resolving its own economic situation, and Silvio Berlusconi is weak politically and thus unable to push things through. Only time will tell.

The lead article in today’s New York Times, “German Leader Faces Key Choices on Rescuing Euro,” describes a deteriorating economic situation in Europe that has now reached the heart of the continent. French banks took a beating on stock markets yesterday to the point where the President, Nicholas Sarkozy, had to intervene with support. Meanwhile, the situation with Greece gets worse and worse as even the initial bailout remains to be ratified by all 17 member nations.

The solution seems to lie with German Chancellor Angela Merkel who is caught between a rock and a hard place. German voters do not even like the July deal mentioned above, and her party suffered severe setbacks in recent regional elections held in the area of her parliamentary seat. Others claim that a more radical economic union is needed to make European nations more like states in the U.S.

The ability to offer Euro bonds is touted as a possible solution to the crisis, or barring that, even allowing Greece to default. Analysts say that the uncertainty is potentially worse than the reality of the situation.

Chancellor Merkel faces a leadership moment. Will she risk her political standing to do what is right and save the Euro? Or will she be like most politicians and take the steps necessary to save her job?

The lead article in today’s New York Times, “Europeans Talk of Sharp Change in Fiscal Affairs,” analyzed some of the weak points of Euro zone countries and how they could be addressed. The Euro has declined significantly as Greece has undergone a sovereign debt crisis, and the lack of central financial institutions has hampered the ability of all Euro-zone countries to assist them.

The problem is the unwieldy nature of the European financial union, and its requirement for unanimous approval by all Euro zone countries before any significant action can occur. The Parliament of any member nation can veto a deal as well.

The article compares the Euro zone legal requirements with the United States’ Articles of Confederation before the Constitution was established. The inability to succeed as a loose grouping of States and the way it was fixed may portend a similar solution by the European Union, creating, in effect, a United States of Europe. Cautious whisperings are already taking place about how to centralize financial authority.

Meanwhile, though, world stock markets continued a significant decline yesterday, with the U.S. markets opening today amid a history of volatility over the past few weeks. Its obvious that a structural fix is needed, but it remains to be seen if the political will exists to accomplish it.

The lead article in today’s New York Times, “Two Europe Leaders Vow Closer Path for Euro Nation,” shows that the meeting between France and Germany to solve the crisis of confidence in the Euro was largely unproductive.

Perhaps, the things they didn’t agree to were more important than those they did. There was no endorsement of a new idea to issue Euro bonds, primarily because that would result in higher borrowing costs for the two nations, and an increase in risk as well. There was no agreement to expand the bailout fund agreed to in a July 21st meeting, and that bailout fund still requires endorsement from the German parliament before it takes effect.

Yet the crisis of the Euro has now expanded beyond the nations with risky economies. German growth slowed to 0.1 percent and France to a similar number. The weak economies of Greece, Portugal, Spain and Italy are now affecting the entire continent.

Maybe, things would be better if all European nations followed the stability pact they once endorsed. This statement urged Euro-zone nations to keep deficits to three percent of GDP and overall debt to 60 percent of GDP. It is largely ignored.

Unfortunately, stock markets don’t lie, and the results of millions of independent investors will give the final vote of confidence in the Euro, or not.

The lead article in today’s New York Times, “Financial Turmoil Evokes Comparison to 2008 Crisis,” compares the current gyrations of the stock market to the situation in 2008 and shows we are much better off now for a number of reasons. For one thing, while the hefty declines in the New York Stock Exchange are similar, the underlying fundamentals of our economy of much better. The current crisis does not concern the actual working aspects of the financial system itself, that is the ability of banks to provide credit, but represents a reaction to slower than expected growth and the European sovereign debt situation.

The inability of countries like Greece, Ireland, Portugal, Spain and Italy to honor their obligations may pose some real and grave dangers, but the situation of our banks to weather the storm is much stronger. They are, in general, lending out a lower percentage of their assets and tolerating a much lower degree of risk than during the subprime mortgage crisis.

Yes, the European Central Bank does have exposure due to its holdings of certain government bonds, but this danger is less pervasive than the massive amounts of mortgage derivatives that had made their way into every aspect of our financial system. So, yes the current correction is unpleasant, but the current debt drama is really nothing to fear.

The lead article in today’s New York Times, “Europe Pledges Vigorous Action to Calm Markets,” represents a largely ineffectual effort to stave off the results of the downgrade of American credit and the increasing instability of the Italian and Spanish economies.

Even though the recent 500-point slide in the Dow Jones average was largely a result of concerns over Europe, the latest action pledging a bond buying program by the European Central Bank is unlikely, in itself, to calm investor fears. It would take about $1.4 trillion to bail out Italy and $700 billion to bail out Spain, way beyond the capability of the Bank. Previous actions have only concerned the minor economies of Greece, Portugal and Ireland, and they weren’t very effective with Greece.

In related, and somewhat encouraging news, Treasury Secretary Timother Geithner pledged to stay on in President Obama’s administration, and it is hoped that would calm the markets, if nothing else.

The Dow Jones is set to open in a few hours, and no one is quite sure what to expect. Investors can be remarkably fickle, and the idea of a rational response is taken with a grain of salt by market analysts. We can only hope that the steps taken described in this essay will provide a temporary pallitive.

The lead article in today’s New York Times, “Greece Approves Tough Measures on the Economy,” shows a striking contrast between events in the Greek government and the reaction on the street, where sometimes violent protests continue to roil that nation.

The vote, it should be noted, is in conception only — the implementation remains to be approved. And the government of Prime Minister George Papandreou is getting weaker and weaker.

The measures are significant. They contain $1.4 billion in defense cuts and $2.9 billion in healthcare cuts as well as the selling of $72 billion in national assets. In addition, the wages of 800,000 public workers has been slashed by 10 percent.

Despite all these efforts, many economists say that the Greek debt will probably still have to be restructured with investors receiving only a certain percentage of their money. And it’s unclear whether the austerity measures will work or even make the problem worse. Meanwhile, Spain, Portugal and Ireland are waiting in the wings with very weak economies of their own.

Unfortunately, problems with the euro affect us in the United States, too. The world is so interconnected, especially financial networks, that a Greek default could have major global ramifications. And most think that Greece is just buying time with its latest budget, and a reckoning is waiting down the road.

The lead story in today’s New York Times, “Obama’s Economic View is Rejected on World Stage,” describes a ganging up on the United States in the Group of 20 talks in Seoul, Korea. The major technique for dealing with reduced global demand and a poor economy, government stimulus programs, has fallen out of favor among our European allies, and they showed no shyness in saying so. Meanwhile, the Fed’s action to pump $600 billion in the economy, to deal with persistent unemployment, was roundly criticized as devaluing the dollar at the expense of the rest of the world.

One wonders if Mr. Obama’s weakened status domestically as a result of the mid-term elections is responsible for his reduced influence overseas. I think among the foreign citizenry, he is still extremely popular, and international elites are puzzled at the rejection of such an intelligent and thoughtful man, especially considering the previous occupant of the White House. The major reason for the change, I believe, lies in the new leader of Great Britian, a conservative, Prime Minister David Cameron, and the success of Angela Merkel of Germany in pursuing a deficit reduction strategy instead of stimulus.

Germany is especially sensitive to the dangers of hyperinflation because it directly led to the rise of Hitler, and Chancellor Merkel has created the most successful response to the weak European economy by pursuing austerity measures. As they say, you can’t argue with success.

The lead article in today’s New York Times, “A Trillion for Europe, with Doubts Attached,” describes a bold new plan by the European Union to support Greece, and potentially Portugal and Spain, with a $1 trillion financial arrangement. The surprise announcement countered a widely held belief that the European Union was too weak and decentralized to act decisively regarding the crisis.

As a result of the action, stock markets around the world rallied including in the United States. The size of the package is even greater than the United States bailout of the banks. However, it’s important to note that the bailout fund does not yet physically exist. It creates a “special purpose vehicle” to raise the money and make the loans.

The article also addresses a certain inequity in the arrangement that could spell trouble down the road. In addition to guaranteeing debt with more debt, at best a temporary solution until weak economies improve and then generate more of their own revenue, the rescue package commits strong European economies such as Germany to support weaker nations. This occurs without any corresponding commitment from the weaker nations to take austerity measures. In fact, the weaker nations may be more likely to avoid tough steps and rely on the support instead.

All in all, there are indeed some issues to be resolved down the road. However, it’s nice to see some good news in the paper these days for a change.