July 13, 2011
The financial markets are unimpressed by euro-zone leaders' dithering on approving a new bailout for Greece. German commentators say the time has come for decisive action by the EU -- especially now that Italy's finances are looking shaky too.
The euro crisis appears to have entered a turbulent new phase, as the European Union hesitates on approving a second bailout for Greece and the risk of contagion seems ever larger.
Italy has slid into speculators' crosshairs this week amid fears that its debt mountain, equivalent to 120 percent of its gross domestic product, has grown too big to handle. Observers say the country -- the third-largest economy in the euro zone -- is too big to be bailed out. On top of that, the rating agency Moody's has now downgraded Ireland's debt to junk status, following its downgrade of Portugal last week.
It seems that the time has come for decisive action on the part of Europe's leaders. But precisely that is missing, as EU leaders prevaricate on passing a second rescue package for Greece. A meeting of the Euro Group of euro-zone finance ministers on Monday failed to produce much in the way of concrete results.
The markets are reacting nervously to the uncertainty. The euro fell to its lowest level against the dollar in four months, and Italian stocks have taken a beating. The country's main share index fell by as much as 4 percent on Tuesday before recovering.
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