Late word is that a new multi-party government will rule Greece. Current prime minister George Papandreou will leave. The head of the new government will be current finance minister Evangelos Venizelos who would work with members of the opposition. The news will not calm concerns about the sovereign debt situation of Greece. The final composition of the news cabinet has not been set. Some of its members may be against the austerity measures approved Papandreou leadership. That leaves the euro zone leaders without a final resolution to issue which have kept if from beginning a new round of loans to Greece.
In France, President Nicolas Sarkozy has proposed very large budget cuts which are rumored to be as high as 8 billion euros for the next fiscal year. France’s economic growth has moved to a standstill, and will be no better than 1% next year. According to Reuters, “France’s budget gap currently stands at 5.7 percent of GDP. The government’s goal is to reduce that to 4.5 percent by next year, and reach the EU-mandated limit of 3 percent by 2013.” This expands the list of already troubled euro zone nations which include Italy, Portugal, Spain, and Greece. France is supposed to be one of the economic twin pillars of the region along with Germany. At this point, Germany is the only one left. That will give it unprecedented power as the region’s debts are restructured.
Douglas A. McIntyre
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