International

Greece Seeks Financial Aid; Italy's Credit Rating Is Lowered

Greek officials will talk for a second day today with European creditors in hopes of winning the next cash injection to ward off a potential default on government debt. The AP reports Greek Finance Minister Evangelos Venizelos is expected to show how Greece has increased taxes and cut the pay and benefits of public workers to meet debt reduction goals.

But Greece is still mired in debt. Greek workers have staged huge protests against government austerity cuts and observers worry Greece isn't doing enough to meet its fiscal targets. The country will run out of money next month to pay government workers.

Economists warn a Greek default could drag down the economies of other European countries who are facing debt problems of their own. As AFP notes, the contagion from even a partial Greek default could have unpredictable and nasty effects on troubled economies such as Ireland, Spain, Portugal - and Italy.

Italians woke up to a shock this morning when they learned credit rating agency Standard and Poor's downgraded Italy's credit rating from A+ to A. Italy, whose economy is far larger than Greece's, also learned S-and-P slashed the country's projected economic growth through 2014, according to the Guardian. Currency researcher Kathy Lien explained Italy's financial situation is "a much bigger deal because a lot more countries are exposed to Italian debt than they are Greek debt."

The New York Times (paywall) examines today what a Greek default might be like. A Greek default would have a shock effect on other countries; but some economists wonder whether default could help Greece get rid of debt it can't realistically pay back, no matter how much spending is cut. The current spending cuts are already slowing the Greek economy.

And the Wall Street Journal reports as the country's GDP has fallen, the number of suicides in Greece has started to rise. There's a heartbreaking story of a Greek small businessman who took his life after his financial woes became too much to bear.

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