The troika comprised of the European Central Bank (ECB) and the International Monetary Fund (IMF) is supervising for Greece in situ in order to plan for the next stage of the country's recovery. Geithner met with the Eurogroup as Obama's concerns grew. Emerging economies are taking sides. And Merkel and Sarkozy teleconferenced with Papandreou in order to try to resolve the Greek crisis. This summarizes the most recent chapter of a winding story of indebted peripheral countries. For the following reasons, Greece continues to be the poster child for a broader crisis in Europe.
First, Greece was the first country to receive a bailout and display incompetent governmental institutions. Second, it launched an organized multilateral plan to propitiate support that would avoid another Lehman debacle.
Those in command are trying to stop a horrendous chain reaction that would result if Greece fails. The markets have been dropping for some time in fear of this happening. A Greek collapse would have an immense political impact on the EU. If contagion cannot be avoided, banks and nations will be drug down with Greece. Among these, Spain and Italy will figure prominently.
Further, the Greek collapse could have a far-reaching and unknown impact on economic growth at a time when the global economy fears another recession. The price is already too high, and multilateral action from particular leaders are conspiring a plan to not pay up, especially when abandoning the euro is the inevitable result.
It is necessary that Greece complies this time around, because it was lack of discipline that has carried them to this point in the first place. Everything that the leaders of our global economy have done so far could crumble and become ineffectual if a Greek collapse inevitably happens. That is a possible scenario.
