Tuesday 24 October 2017

Only radical action can save us from meltdown

If European leaders cling to the delusion that bailing out one country will save the rest then we're in for a hard fall, writes Alan Ruddock

Angel Gurria, the secretary general of the Organisation for Economic Co-Operation and Development, could not have been clearer last week. The Greek crisis threatened the stability of the world's financial system. Contagion -- the spreading of Greek's problems to neighbouring countries -- had already happened. "This is like (the) Ebola (virus). When you realise you have it you have to cut your leg off in order to survive," he said.

Gurria could not have been more right, or more wrong. Greece's crippling debt burden, and its inability to repay what it owes, threatens a financial catastrophe that could far exceed the collapse of Lehman Brothers in 2008.

If it defaults on those debts or tries to "restructure" them -- a default by another name -- then the market traders who have made their killing will use their profits to mount an assault on another sovereign victim. Portugal is the next in line, but the actual target for sustained attack could equally be Spain, Ireland, Italy or even the United Kingdom after this week's election.

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