The European Union is scrambling to find a politically tolerable way of bailing out Greece, which is seemingly in danger of defaulting on its debts.
The Greek public and civil servants are protesting at the prospect of government cut-backs and tax hikes as it tries to reduce expenditure and service its debt. The political and economic uncertainty is weighing on the euro, weakening the currency of the European Union.
At the same time, there is increasing concern among economists and others about the size of the national debt and budget deficit in the US. While the US is still seen as a safe haven for investors, worry about US debt has been dragging on the dollar and global financial markets for some time.
Sovereign debt defaults are the next threat to the international financial system, as some countries begin to struggle to pay back the loans they used to fund government spending as they tried to ward off recession.
The painful reality is that the only way to balance the books and maintain sustainable — if not spectacular — economic growth, is for countries to live within their means. Protests, demonstrations and ever more complicated financing arrangements cannot change this.
