The violence in Greece and the likelihood of more strike action continue to depress the markets. The fear is the government will not be able to carry out the cuts which are a precondition for its multi billion euro bailout.
Further concerns that Greece is just the first of several Eurozone countries to go broke have triggered intense market speculation over who is next.
Commission President Jose Manuel Barroso slammed speculators for gambling with the EU’s future: “The Commission will do whatever necessary to ensure that financial markets are not a playground for speculation. Free markets constitute the basis for the functioning of successful economies but free markets need rules and compliance.”
With Spain firmly in the sights of those market speculators, Prime Minister Jose Luis Rodriguez Zapatero took the unusual step of inviting the opposition leader Mariano Rajoy to discuss what was to be done. Spain’s own deficit is almost four times the European Union’s limit
Afterwards, despite the talks failing to produce anything concrete Prime Minister Zapatero tried to be reassuring: “The government has a plan for reducing the deficit, and it will be carried out. We will keep it without risking the recovery.”
But resolute words may not be enough. Fear of financial instability spreading in the eurozone have already taken their toll on the currency. The euro has fallen to its lowest level in over a year.