Wednesday, August 24, 2011

Collateral damage

Financial Times
August 23, 2011

There has been much talk about solidarity among eurozone governments as they strive to resolve their sovereign debt woes. But as leaders seek to navigate the ever narrower straits between the politically intolerable and the economically suicidal, the gap between rhetoric and action has widened.

There is little solidarity evident in the latest initiative by some creditor countries to shake down Greece for cash collateral with the aim of securing their commitments to Athens through the obligations taken on by the European financial stability facility.

True, the political pressure on creditor governments to limit their exposure to the troubled southern periphery has been mounting as the economic picture has soured. But the preferential deal Finland has struck with Athens is simply destructive of the wider objective of assisting Greece.


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