Greece announced Sunday that it had reached an agreement on a long-delayed rescue package that will require years of painful fiscal belt-tightening, but the deal probably will not defuse the potential threats to other European countries also suffering from mounting debts and troubled economies.
“I have done and will do everything not to let the country go bankrupt,” Prime Minister George Papandreou said in a televised address that urged Greeks to accept “great sacrifices” to avoid “catastrophe.”
The bailout, which was worked out over weeks of negotiations with the International Monetary Fund and Greece’s European partners, calls for as much as €110 billion, or $145 billion, in loans intended to stave off an immediate debt default and stop the spread of economic contagion to other parts of the region.
But analysts warned that Greece itself has not yet solved its fundamental problems and that other sovereign debt crises could arise as lenders and market speculators turn their attention to a handful of similarly vulnerable nations.
Greece has been a wake-up call in Europe.
And in the US too. The fundamental problem with a welfare state is that there is more welfare than money to pay for it.