While we continue to deal with our complex and deep-rooted economic problems here, things aren’t getting any better across the Atlantic. After decades of promising far more than they could afford, European countries are facing an aging population and massive debt burdens. Greece, of course, is the most visible example of this unfortunate situation. But as is always the case, a country’s economic crisis is rarely contained to its borders.
Moody’s ratings service has downgraded two of France’s top banks due in part to their Greek exposure. “France, where shares of the biggest banks have plummeted recently on fears of exposure to Greece’s debt, is pressing for a stronger signal from Germany that Europe will act to resolve the Greek matter before it spreads further contagion,” reports The New York Times. Also “concerns about their funding and liquidity profiles had increased in the light of worsening refinancing conditions,” Reuters explains. Moody’s did not take any action regarding France’s largest bank, BNP Paribas, saying it had, Reuters continues, “adequate cushion to support its Greek, Portuguese and Irish exposure.”
Meanwhile, French President Nicolas Sarkozy and German Chancellor Angela Merkel met today with Greek Prime Minister George Papandreou in an effort to drum up solutions for Greece’s debt crisis.
The New York Times reports:
A stopgap bailout plan announced on July 21 has yet to be approved by all 17 nations that share the euro currency, and in recent weeks a renewed sense of crisis has engulfed the euro region.
[Papandreou’s] government has proved incapable so far of making the kinds of legal changes and budget cuts in the middle of a deep recession that Athens has promised its European partners and the International Monetary Fund.
“It is our top priority to avoid an uncontrolled default,” Mrs. Merkel said, “because it would hit not only Greece. The danger would be very high that it would hit many other countries.”
