European Ministers Say Greece Must Tackle Deficit On Its Own

[ASusilovic]

Jan. 18 (Bloomberg) -- European finance chiefs said Greece must rein in its budget deficit on its own as the nation’s fiscal crisis threatens to spread to other countries in the region.

“The Greeks are very much aware of how serious the situation is, and they are very much aware that they will in the end have to solve the situation themselves,” Dutch Finance Minister Wouter Bos told reporters today before a meeting with euro-area counterparts in Brussels. “They have difficult work to do,” Germany’s Wolfgang Schaeuble said.

Greece last week presented its economic plan to push down a budget deficit that’s still more than four times the European Union’s limit of 3 percent of gross domestic product and which has prompted rating companies to cut the nation’s creditworthiness. Finance Minister George Papaconstantinou will brief his counterparts on the budget plan, which includes 10 billion euros ($14.4 billion) in cuts this year.

Papaconstantinou said in an interview on Jan. 14 that overall government debt will “peak” at 120 percent of GDP next year and “start declining afterwards.” He also signaled the need for Greece to provide more-reliable statistics after the EU said earlier this month that the country’s data contained “severe irregularities.”

“The serious reforms made to their statistics will help detect and avoid more problems like this in the future,” Schaeuble told reporters.

http://www.bloomberg.com/apps/news?pid=20601087&sid=anQmz0rOyhjY&pos=4

No bailout money ? That should not bodeso well for Europe's GDP growth "wishes"...:eek:

 

[Misthos]

Which is a worse problem to have, Greece or California?

From: ECB’s Trichet Says Greece Is No California
http://www.dailymarkets.com/economy/2010/01/14/ecbs-trichet-says-greece-is-no-california/

quote:

Asked about any threat to the euro because of Greece’s problems, Trichet pointed out that Greece’s Gross Domestic Product (GDP) is a mere 2.5% - 3% of the euro zone GDP. In California, which has its own set of severe fiscal challenges, the magnitude of the problem is far larger (California’s GDP is over 12% of U.S. GDP). He went on to stress that euro zone budget deficits currently amount to about 6.5% - 7% in the aggregate, compared to 12% in the U.S...

So how would the bond markets react if there were issues occurring simultaneously with California, New Jersey, New York, Greece, Portugal, and Spain? The next few years will be very interesting.

So what's a bigger problem, a failed US State, or a failed EU Country? Will Obama bail out California? And in the end, who bails out the US?

What a mess.

Got gold?