The eurozone: a crisis of policy, not debt

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http://www.guardian.co.uk/commentisfree/cifamerica/2011/sep/27/eurozone-crisis-debt-policy

Three months ago, I wrote here about the risks that the European authorities were posing to the US economy and asked what the US government was going to do about it. It was clear at that time that "the Troika" – the European Commission, European Central Bank (ECB) and the International Monetary Fund (IMF) – was once again playing a dangerous game of brinksmanship at that time with the government of Greece. They were trying to force the Greek parliament to adopt measures that would further shrink the Greek economy and therefore make both their economic situation and their debt problem worse, while inflicting more pain on the Greek electorate. The threat from the Troika was putting the whole European financial system at risk, since it raised the prospect of a chaotic, unilateral Greek default.

My hope was that someone in the US Congress would step up to the plate and try to hold the US Treasury Department accountable. Treasury is still overwhelmingly the biggest power within the IMF – in fact, it has dominated the fund for the past six decades. Since the IMF is one of the three key decision-makers in Europe, the US government could at least use this avenue of influence to prevent them from making things worse there. And since that crisis in June, the Troika has also played a similar game of chicken with Italy – a country with more than five times the sovereign debt of Greece.

Last week, President Obama woke up to the fact that the Troika could pull the US economy down along with Europe and sent Tim Geithner to crash the eurozone ministers' meeting. His job was to tell them to get their act together before their mess spreads across the Atlantic and costs Obama his re-election. On Monday, Obama took the even more unusual step of making his criticisms public, saying that the crisis in Europe was "scaring the world" and that the European authorities had not acted quickly enough.

Yet, there is no sign that the administration is even using its influence within the IMF to avoid disaster. One of the main triggers to the most recent financial turmoil was another fight between the IMF and Greece over a measly €8bn loan disbursement. The fund – presumably with US approval – has been threatening to hold up this money unless the Greek government implemented further budget tightening. In the face of massive protests and Greek public opposition to further punishment, this intransigence by the IMF once again threatened to push Greece to a chaotic default. That, in turn, could bring major European banks to insolvency and risk a full-blown financial crisis. And all because the Greek government couldn't meet its budget targets for an €8bn loan disbursement.

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1. Does anyone think This Administration would stop them in the EU when they are pushing the SAME

Policies HERE? Face it folks BO is a NEOCON

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2. Definitely a NeoLiberal (conservative economics), perhaps a NeoCon (Middle East policy) as well