Just as I started writing this column, the main US stockmarket, the Dow Jones, had fallen by 1000 points, only to recover about 560 points by the time the market closed for the day.
A trader error was subsequently blamed for the huge sell-off, but consider this: a trillion dollars was wiped off world stock markets over the previous few days as the Greek debt crisis was laid bare.
Countries are just like companies or individuals; eventually, if you can’t convince your bankers – no matter how dumb they were to lend you the money in the first place – to roll up your debt, and no one else will lend you any more money, you go broke.
This is why Greece is getting a €110 billion bail-out over the next three years from the banks of last resort, the European Central Bank and the IMF. It is €110 billion that European and American taxpayers will have to pay.
Our share is now over a billion euro, and many commentators are suggesting that we should consider it a gift, not a loan (on top of the other €8.5 billion they owe us.)
Greece may be the weakest link in the euro chain but we aren’t far behind in the queue.
We still have to reduce our massive deficit and annual debt before we borrow at German level interest rates again. And while the weak euro is genuinely good news for our exporters it spells bad news for the rest of us.
The price of oil in particular – and all the goods produced from oil – will go up, as will the cost of many food items that we buy/import from the UK.
See The Munster Express newspaper for full story.
