The Greek economy continues to slide. The promise of an aid package from the European Union a few weeks ago briefly stanched speculation against Athens, but relief proved fleeting. Acknowledging that the Greek economy was "a sinking ship," Prime Minister George Papandreou last week formally called for an international bailout, a move that focuses attention not just on Greece, but the entire EU.
Will the union be able to marshal a consensus that helps Greece and demonstrates the shared sense of purpose that must guide the EU if it is to survive?
Warning signs have been flashing for months as Greek debt matures and the government tries to negotiate its extension. The country owes about $400 billion, a deficit larger than its entire economy; it needs to borrow about $72 billion this year alone. The government budget deficit last year reached 13.6 percent of GDP, four times the limit set by the EU. Next month, $11.3 billion in 10-year bonds are due, and concerns about Athens' ability to come up with funds have pushed interest rates on those bonds to nearly 9 percent, three times the rate for other EU governments.