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Jun 11, 2012 6:01 AM GMT+0800 The future of the euro may be determined in the coming weeks, asGreek voters decide whether to honor the country s internationalbailout and create a first test for Spain s newly built 100billion-euro ($125 billion) banking firewall. With Greece going to the polls in six days, the last surveys ofelector intentions showed the main party opposing the terms of itsbailout vying for first place. The government in Athens has a fewweeks before exhausting its funds, making this is amake-or-break period, former Greek Prime Minister GeorgePapandreou told Bloomberg Television in a June 8 interview. The European debt crisis, now in its third year, reached a newmilestone after Spain abandoned unilateral attempts to rescue itsbanks and became the fourth country in the 17-member currency unionto seek an emergency bailout. The aid blueprint hammered out in anemergency conference call among euro finance chiefs two days ago isdesigned to create a line of defense if the Greek voting unleashesa new bout of market turmoil. We are approaching a moment of truth for the euro zone, Britain s Chancellor of the Exchequer George Osborne told theSunday Telegraph yesterday. After more than two years ofuncertainty, instability and slow growth, decisions taken over thenext few months could determine the economic future of the wholeEuropean continent for the next decade and beyond. Close Race Polls show the June 17 election in Greece may be a close race. NewDemocracy, Greece s largest pro-bailout party, led anti-bailoutSyriza by 22.7 percent to 22 percent, according to an ANT1 TV pollon June 1, the last date surveys were made public. An election onMay 6 failed to produce a viable governing majority. Syriza s leader, Alexis Tsipras, has pledged to keep Greece in theeuro while scrapping bailout terms in order to end the hardshipbrought on by austerity. Meanwhile, pro-bailout proponents, such asNew Democracy leader Antonis Samaras, have framed the contest as adecision on whether to leave the euro area. A departure wouldtrigger hyperinflation, a bank run and widespread poverty, Samarashas said. The currency bloc that at its setup in 1999 capped Europe sprogression from war to prosperity, was declared irreversible byits founders. European Union treaties make no provision for acountry to withdraw from the currency and the European CentralBank s legal department said in December 2009 that an expulsion would be so challenging, conceptually, legally and practically,that its likelihood is close to zero. Splintering of Europe This is the point where we have to make the decision, Papandreou said in the interview, to be aired in full onBloomberg s Inside Track at 11:00 a.m. London time today. If wedon t, I believe we have a small window of time -- the next fewmonths -- and maybe if we have that -- before we see a splinteringof Europe. So this is a make-or-break period. As the Greek election result is declared, leaders of the Group of20 most industrialized nations will be preparing for discussions onthe threat of the debt crisis at a summit meeting in Los Cabos,Mexico. The June 18-19 gathering will be part of a series ofmeetings on the euro crisis culminating in an EU meeting inBrussels at the end of the month, which could present a masterplan drawn up by officials including EU President Herman VanRompuy and ECB President Mario Draghi to hold the euro together. Decisive Action President Barack Obama kept up his pressure on European leaders totake decisive action to bolster growth and tackle debt, tellingreporters June 8 at the White House that the euro crisis isincreasingly becoming a drag on the U.S. economy. The euro area needs an overhaul, ECB Council member Jens Weidmanntold Welt am Sonntag in an interview published yesterday. The currency union can t function sustainably the way it is atthe moment, Weidmann, who s also Bundesbank president, was citedby the Berlin-based paper as saying. We need more clarity if wewant to go down the route to a fiscal union, or if we want to keeprelying on self-responsible national budget policies. In the lattercase, the common liabilities need to be narrowly limited. The Spanish bailout, which was announced June 9 after a three-hourconference call of European finance ministers, may offer a salve tomarkets ahead of the Greek vote. Spanish government bonds posted their first weekly gain in a monthand the country s borrowing costs retreated last week amidoptimism European leaders were preparing a bailout for Spanishbanks. The 10-year yield dropped 31 basis points, or 0.31percentage points, to 6.22 percent last week. Bought More Time With the Spanish bailout at least we ve bought more time andhelped to ring-fence Greece, Carsten Brzeski, a former EuropeanCommission economist who works for ING Groep NV in Brussels, saidyesterday in an interview. It gives much more breathing space tocome up with this master plan . That plan may involve a menu of proposals suggested by Europeanleaders over the past weeks, including the possibility of a moreintegrated banking system, with euro-wide mechanisms such asdeposit insurance leading to a so-called fiscal union. Spanish Prime Minister Mariano Rajoy, who as recently as May 28said he wouldn t seek a bailout, characterized the weekend deal asa credit line for banks and an endorsement of his policies. Rajoywas forced to back off his pledge that the government wouldre-capitalize the banking system on its own after foreign investorsscaled back their holdings of Spanish debt. Rescue Fund If we hadn t done what we ve done in the past five months, theintervention of the Kingdom of Spain would have been on the tableyesterday, Rajoy told reporters in Madrid yesterday. He stuck toplans to visit the European soccer championship in Poland becausethe situation is resolved. Spain is twice the size of the three economies that have soughtbailout assistance so far -- Greece, Ireland and Portugal. Thefunds will be channeled through the state-run FROB bank-rescuefund, and will add to Spain s debt, which was 68.5 percent ofgross domestic product last year. The bailout adds to the 386 billion euros in bailout funds fromEuropean governments and the International Monetary Fund have madesince 2010. The e-commerce company in China offers quality products such as Waterproof LED Flood Lights , High Bay LED Lamps Manufacturer, and more. For more , please visit Round LED Panel Light today!
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