Eurozone economic crisis continues
After Greece, Italy is the latest Eurozone country to come under pressure from financial markets.
Story by Gerry Hadden, PRI's The World. Use audio player above to listen to full report.
Europe is in a panic. Concerns over the future of its main currency, the Euro, have been battering the continent’s markets since Monday.
European Union finance ministers are trying to keep the Greek debt crisis from spreading from Greece to other heavily indebted members. But the obstacles only seem to mount, as confidence in the currency weakens.
Italy is the latest Euro-zone country to come under pressure from financial markets, as concerns about its huge deficit pushed interest rates on its bonds to record highs. Italy is Europe's third largest economy. Any hint of serious trouble there would spell real trouble for the Euro.
While ratings agencies Moody's and Standard and Poor's have threatened to downgrade Italy's debt, they’ve already reduced Portuguese and Irish debt to junk status.
Europe's latest proposal is to keep Greece solvent: having private investors to take voluntary losses on Greek bond. In theory, that would give Athens some breathing room. But the ratings agencies say that would trigger a default.
Europe seems to be at a loss as to what to do, but a couple ideas have been floated.
One is to create a Euro-bond, guaranteed by member states and the European Central Bank.
Another, more radical idea is for Europe to create its own ratings agency, with its own presumably more favorable criteria. Then the continent could simply ignore the Moody’s and Standard and Poor's of the world.
In the meantime, some French legislators are floating yet another idea to avoid future debt crises. They're proposing writing a balanced budget provision into the French constitution.
Read more on TheWorld.org.
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