When talking of issues of finance and economy in Europe, it is hard not to make a pun, even inadvertently. Fiddling while Greece burns is an obvious take on the story of Nero, who according to legend, played his music as the city of Rome crumbled around him as fire took hold.
The story has come to become synonymous with inaction, dithering, profiteering and procrastination as a crisis deepens. Well, that crisis has deepened and that crisis is Greece’s debt which has exploded to 159.1% of Gross Domestic Product – up from 139% last year.
At the same time, fiddling while Greece burns can also refer to the actual fraud Greece’s government of the time committed in submitting grossly exaggerated figures about its GDP, debt and deficit ratios.
Either way, the title of this article holds true. We have heard it many times, Greece is on the edge, close to default, almost bankrupt, saved at the eleventh hour… etc. But this time, it could actually be happening and we would be absolutely delusional if we thought that this is not going to affect us, yes, us on this small island, slap bang in the middle of the Mediterranean.
The situation is now getting critical and France and Germany organised a joint Cabinet meeting to discuss the ongoing crisis. Greek politicians are at loggerheads over the conditions imposed by Europe in getting the next cash payout: €130 billion.
But it is not only Greece. Eurostat figures have shown that while the overall debt of Europe has decreased, the problem areas continue to worsen.
Out of those who received bailouts, Portugal’s debt was up to 110.1% from 106.5%. Ireland’s was also up to 104.9% from 102.3%. Cyprus and Spain, both problems in the waiting saw their debt levels at 67.5% and Spain 66%, unchanged from the last round of figures. Malta, meanwhile, managed to shave off 70.3% down from 71.9%
This all needs to be wrapped up by the next summit, which is to be held early in March and during which it is aimed to have a new concrete plan of action which everyone has to adhere to in terms of fiscal discipline. But even that summit might take a new direction as the Romanian government resigned due to the number of protests which have taken place over the past weeks.
No doubt, the focus now is going to be on Greece and the latest idea which was floated during the Franco-German Cabinet meeting was for Greece to have a separate fund into which it would pay funds to directly pay off its crushing debt. This can also be interpreted as a way for EU leaders to wrest back some control from the European Commission and the idea of a Super Commission to deal with fiscal implementation and monitoring. In other words, EU leaders would be able to see exactly what Greece is doing, without having to go through the EC which, for starters, is perceived to have turned a blind eye to blatantly cooked Greek figures. The EC has redoubled its efforts and has really changed tack since that debacle, but in the process has become secretive and reclusive, prompting, perhaps, such a proposal. Either way, it’s a good idea and should ensure that Greece does do its bit, and that in turn, would also be seen by the markets, who lest we forget, are the key players in all of this.
2012 picks up just where 2011 left off, at least in that respect.