Few analysts are of the opinion that Greece will be able to solve its crisis through savings measures. They instead believe that write-downs on debts will be required, and this will affect a number of financial institutions, primarily in Europe and mostly in Germany.

Several countries in Europe are facing serious financial difficulties with large deficits, and the situations in Portugal, Spain, Ireland and Italy can also require rectification measures. Some analysts are wondering if there is a risk of a serious shake-down of the entire EMU project. Even England, which is not involved in the EMU project, is experiencing serious economic difficulties, and the US deficit is gigantic. The worry is that that some serious tightening of the public purse strings will be required, something that will negatively affect growth and potentially lead to an intentional speed-up in inflation in an effort to reduce debt. Trying to accelerate out of the recession by increasing growth to restore order to public finances is a method that is advocated by many, but one which carries high risks and requires a great deal of courage. On the other hand, the alternatives are frightening. Greece is very likely just the tip of a large and threatening financial iceberg.

 
Hans Nyman
Automotive Sweden