Despite the 'good news' stories about a 'global recovery' peddled incessantly by the corporate media for well over a year , it looks like a new front in the economic crisis has opened out in Europe.
The downgrading by Standard & Poor's ratings of the Greek and Portuguese government debt to the level of junk bond status signals that the economies of Europe are in deep trouble.
The problem would not be so potentially catastrophic if it was just the Greek and Portuguese economies going to hell in a handcart but Italy, Spain and Ireland are teetering on the brink - and Britain is not out of the frame either.
Judging by the talk on the business websites the alarm bells are beginning to ring about the state of the Spanish economy - which is the fifth largest economy in Europe.
The conservative Financial Times said this week that the crisis in Greece 'is Europe’s equivalent of the US subprime crisis. Unless we hear some implausibly good news from Athens by Friday, it will soon blow up.'
If it does blow up it could potentially lead to the collapse of the euro which will spread the contagion throughout the global economy, as more currencies would come under pressure. Amongst these is the Japanese yen, as the national debt there moves up towards 250% of its GDP. As the world’s second largest economy, a sovereign debt crisis of the yen would have an absolutely massive impact.
With the IMF and the EU demanding more austerity measures be implemented by the Greek Government, the level of strike action continues to escalate as workers resist being forced to pay the price for a crisis that they are not responsible for.
The German government (whose banks hold the biggest percentage of the Greek debt) is continuing to insist that the Greek government provide detailed long-term plans for even deeper austerity measures before it will release funds from a $US60 billion rescue package.
The Greek government though is already anxious about the level of political resistance and fears its own position will become untenable if an already tense situation is inflamed by more extreme austerity measures.
The next general strike in Greece will happen on May 5