A year after the start of the Greek crisis, the eurozone is still on the brink of disaster. The 110 billion pledged by the EU and the IMF and the drastic austerity measures implemented by the Papandreou government have not been enough to restore market confidence or to convince the ratings agencies, which have increased pressure on the country while its financial situation continues to worsen.
Hot on the heels of Greece, Ireland and Portugal, which have been forced to accept a stick and carrot regimen of bailouts and austerity packages, Italy and Spain have been rocked by attacks on financial markets. And the fear is that a default involving either of these countries could result in host of unpredictable political and economic consequences including the break-up of the eurozone.
At the Frankfurt headquarters of the European Central Bank, and in capital cities throughout Europe, political and economic decision makers are attempting to find a solution which may involve more austerity, more EU solidarity, or even banking sector participation and sovereign default.
Amid conflicting calls for more federalism and the defence of national interests, European leaders are at a loss as to which course to take. Terrorised by the power of the markets and rating agencies, they appear incapable of the decisive action which is urgently needed if the situation is to be brought under control.