Fears are growing that euro zone debts are in serious danger of spreading. Anxieties were heightened after Moody’s cut Ireland’s credit rating to junk status indicating a second bailout was likely.
The move came after a day of turmoil on the markets as euro zone finance ministers opened the door to a possible Greek default which could ripple through Europe’s banking system.
Criticism is growing towards countries such as Germany who are dragging their feet on assuring a second Greek bailout. Spain with its own deficit problems is suffering from the fallout.
Spain’s PM Jose Luis Rodriguez Zapatero warned:
“All euro zone countries have to assume their responsibilities at this moment including the most powerful countries in particular.”
Italy’s premier has tried to calm fears by making assurances that his country will be able to put internal political squabbles to one side and get a 40-billion-euro austerity package through parliament.
In a statement Silvio Berlusconi said:
“The crisis is pushing us to accelerate the process of correction extremely rapidly in trying to bring the budget into balance by 2014.”
It remains to be seen how the markets will react.