Christian Science Monitor
May 10, 2011
Just a year after wealthier European governments rescued Athens from default with $157 billion in loans, Greece is slipping into crisis again.
After seeing its credit rating sharply downgraded on Monday, and unable to meet deficit-reduction targets laid down by Germany and others, Greece is getting desperate – and Europe is getting anxious.
Officials are floating euphemistic phrases like “voluntary restructuring,” but make no mistake: The painful concessions Greece would probably require from creditors amount to a default. If that happens, the broader European economy will be on its knees, its credibility shattered. So what should Greece do?
The only real solutions are for Greece and other low-income countries to abandon the euro and for Europe as a whole to rethink its welfare state.
Cutting government stimulus or raising taxes further is not viable. Either would slow growth, and growth is already too anemic in Greece and other troubled European countries to support pensions and other social benefits.
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See also: "The top 10 things Greece can sell to pay off its debt"
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