Greece: Kicking the Can Down the Road?

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.