Socialist Worker

Eurozone leaders panic as bailouts fail to stem crisis

Issue No. 2314

A coordinated eurozone bailout of Spain’s economy looks increasingly likely. But there is also deep confusion about when and how this could happen.

Spain’s economic Minister Luis de Guindos tried to rally his German, French and Italian counterparts to speed up European Union “help” for Spain last week. He wants to hurry the implementation of plans agreed at the last EU summit to reduce Spain’s borrowing costs.

But De Guindos’ move ended in farce as France and Italy first denied all knowledge of the plan—but pledged their support the next day. Even after that, they wouldn’t commit to a timetable.

By Thursday Spain’s borrowing costs had reached a new high of 7.6 percent. Seven percent and over is widely seen as a “danger zone”. Banks will often stop lending money, concerned the country will not be able to repay its debts.

Spain’s borrowing rate started to drop on Monday of this week as a bailout began to look more probable. But the problem for Europe’s ruling classes is that the bailouts aren’t working.

Billions have been pumped into the Greek economy, coupled with ferocious austerity measures. Yet things have only got worse. In these desperate attempts to save their system, the politicians and the bosses have no ideas beyond “make the poor pay”.

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Tue 31 Jul 2012, 16:51 BST
Issue No. 2314
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