I’d like to recommend two items published on the Transnational Institute’s website as introductory reading on the sovereign debt crisis in Europe.
An article by Maricia Frangakis, titled ‘Greece marks failure of EU integration’, provides a good overview of the situation in Greece.
“The ‘bail-outs’ provided by the EU and the IMF do not solve the problem of over-indebtedness. In fact, they make it worse. This is because the austerity measures to which they are tied intensify the recession of the Greek economy. While GDP is shrinking, the ratio of both the public deficit and debt increase. Further, the ongoing speculation against Greek government bonds keeps increasing the interest rates and therefore the burden of the debt.”
Second an interview with Susan George, by Nick Buxton, gives a wider view of structural problems at the EU level.
“The European Central Bank is the obstacle to success, not the Euro per se. The ECB doesn’t lend to governments but to banks, at 1% or less, and then banks lend to governments—short term Greek and Irish debt has “junk” status and is now priced at 20%.”