Not good news – the financial crisis in Greece appears to be worsening, threatening the entire global economy as a result. From the Guardian:
The French president Nicolas Sarkozy and German chancellor Angela Merkel will hold emergency talks on Wednesday in a desperate attempt to hold the eurozone together and formulate a response to the Greek prime minister's plan for a referendum on the austerity measures imposed by his European partners.
George Papandreou's socialist government is on the brink of collapse after his referendum plan sparked an angry reaction within his own party and plunged Europe back into turmoil, just days after a complex rescue deal had been agreed – requiring Greece to embark on tough cost-cutting measures….
Stock markets had reacted with alarm to the prospect that the €1tn deal to rescue the euro currency union was in danger of collapse. The FTSE 100 closed down 2.2% at 5421 after an initial fall of 5%. The German Dax index and French Cac remained 5% down at the close, while the Dow Jones closed down almost 2.5%.
This latest global economic crisis highlights the inherent instability of our modern financial system. Global markets are extremely volatile – beneficial to speculators and the ultra wealthy, but disastrous for everyone else. Due to lack of regulations on capital flow, money shoots from one side of the planet to another in the blink of an eye. A country can literally go bankrupt over night if investors decide to pull their money, giving governments little real control over their country's economic future.
The truth is, financial markets run the world, and they work in the interests of the rich. Lack of regulation leads to riskier investments, bubbles and the inevitable crash. Governments and the public step in to clean up the mess, then it's back to business as usual.The risk is socialized and the profit privatized – the defining characteristic of modern finance that masquerades as free market capitalism.
The idea that a developed industrialized nation like Greece could fall apart over night is a truly terrifying prospect, and a clear warning that the balance of power must shift if we are to attain some sort of functioning global economic system. Hopefully, the Greek crisis can be resolved without plummeting the planet into another recession, but regardless, things must change drastically to prevent this type of vulnerability. It is simply not sustainable in the long run.