Desperate to prevent a default that could throw the global economy into crisis, European leaders this week signaled they would bail Greece out again. But the estimated $64 billion rescue fund, following last year’s $160 billion, will flow only if the Greek parliament approves by next week a painful new catalog of austerity measures, including tax hikes, social spending cuts, and privatization of national industries. The parliament may balk, what with thousands of Greeks outside the building chanting, “Thieves! Thieves!” Many analysts fear a default could hit global credit and debt markets as hard as the 2008 collapse of Lehman Brothers did.
There’s great danger here for the U.S., said The Washington Post in an editorial. Our economy is “too weak to risk a Lehman-like shock,” and a Greek default would drive up the dollar, costing us exports and jobs. Yet there’s little the U.S. can do about Greece; we are “at the mercy of European politics.” That’s why the Obama administration “is prodding the Europeans to deal with the Greek problem swiftly, even if it means slapping on yet another band-aid.”
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