All the 27 European leaders will also prepare the final sketch of another treaty that will look after sharply tightening fiscal discipline in the euro zone, called the fiscal compact that is designed to ensure another sovereign debt crisis does not happen in future. European leaders are in talks of signing off on both treaties on January 30, allowing the ESM to start operating from July.
As the Eurozone debt crisis continues, attention is turning from Greece to Italy as Europe’s third-largest economy is beginning to buckle and worries emerge of more widespread economic collapse than previously thought. Yes, Greece’s debt is bad at $500 billion. But, Italy is at $2.6 trillion (five times larger than Greece’s), and is also at risk of defaulting. Italy is also a much larger economy than Greece, so Greece defaulting is one thing. Italy is completely another.
Five hundred billion dollars. That’s how much Greece has borrowed, and now owes to many others. Five hundred billion dollars is also the same as half a trillion dollars, and no matter how it’s described that’s a lot of money for Greece and the Eurozone to remedy. It took years of mismanaged spending and widespread tax evasion to get the country in this mess, while the Eurozone has only a very limited time to get Greece, and other countries out of the mess before the largest economic zone in the world falls apart.
When the European Union and the International Monetary Fund agreed in July to provide a second bailout for Greece, this debt-ridden Euro nation, as well …