'Mounting deficits in weaker European economies including Greece, Portugal and Spain have raised questions about the health of the global financial system. That compounded concerns about growth in China and proposed U.S. bank regulations took the market down from a 15-month high reached in January.
Greece's finance minister said Monday the government is preparing to boost some taxes to shore up its finances. But civil servants opposed to cutbacks have pledged to strike on Wednesday.
Brett Hryb, a portfolio manager with MFC Global Investment Management in Toronto, said the latest concern is that the financial troubles in a country like Greece, whose economy is small compared with the rest of Europe, will spill into other countries.
"Clearly Greece itself is nothing. It's just a blip. It's what the contagion could be," he said.'
from the AP
http://news.yahoo.com/s/ap/20100208/ap_on_bi_st_ma_re/us_wall_street
There have been a few discussions on here about the relationship between austerity measures proposed by PASOK and the various social struggles (see http://libcom.org/news/strikes-greet-austerity-measures-greece-04022010). I haven't seen anything yet on this indirect relationship - the pressure, however small, placed on the global economy by these local struggles.
This connection seems simultaneously very clear and very abstract. On the one hand, the steps that most governments take in this economic situation are at least partially blocked by the level of class struggle underway in Greece (though I don't know enough about the specifics of the debt and the possibility of default). There seems to be some state of stasis that has been entered into, where no one has a completely decisive advantage. This stasis might be brief, but it's still gone on longer than most comparable situations in the West in my lifetime, and is thus a bit of an unknown variable.
On the other hand, the connection between global financial markets and any one intensity of class struggle seems necessarily vague. I'm at least somewhat convinced by autonomist analyses from the 70s, that pose a circuit between variations in the real economy and various interests on either side of the class struggle (e.g. the use of inflation and energy prices to attack wage gains), but am still totally hazy about the relationship between the official representation of the economy and the class struggle in a period in which fictitious capital seems much more dominant. Suggestions on readings in this area would be appreciated.
My final question is whether this idea of "what the contagion could be" has any interesting content. Behind the concern for deficits and financial market, does it express the possibility of an international spread of social struggle? If Greece (along with other smaller economies in the EU, like Spain and Portugal) succeeds in shaking larger markets, does that in any way imply something more interesting than when the market is shaken by, say, a spat between Google and China?
I'm no expert but the level of debt in several eurozone countries is reaching the point where they are placing strain on the currency. The problem with Greece is basically that the government can't pay its bills but can't cut costs either (it's faced defeat when trying to 'reform' pensions and cut staff. Basically if Greece can't avoid these problems then bigger countries with similar levels of debt and deficits might follow suit. The bigger countries might be able to help Greece get through this but not much more (for example if Spain had trouble). The UK has avoided having its debt rating changed which would increase the cost of borrowing and compound the problem. Other countries like Spain or Greece could cause a major problem. Someone would have to pay the debts or the entire eurozone would have to basically be willing to go to war with its creditors. The strain of supporting of Greece say could push Germany for example into financial trouble.
I'd appreciate a bit more expert knowledge on the subject.