M. Trichet’s desperate mission

Jean-Claude Trichet left a central bankers’[ meeting in Sydney a day early, with the weight of the world on his shoulders.

World markets had risen on the expectation that the European Community would mount some kind of rescue mission for Greece, a country that really is having trouble meeting its debts.

And, as President of the European Central Bank M. Trichet is expected to play a central role in that operation,

But nothing is certain.

Some analysts have suggested that the European Investment Bank might offer Greece a loan that would see it through its present troubles.

However that institution is discouraging that idea. It said, in a statement that it could:”only finance viable projects.”

And, to emphasise that point, the bank said its rules would not allow it to help an EU country cover its budget deficit.

Public debt in Greece now exceeds 113 per cent of that country’s annual economic output.

And its budget deficit , stands at 12.7 per cent of the nation’s gross domestic product.

Greece  has been reluctant to ask for help.  Its finance minister says that would send a bad signal.

However it needs help, urgently.

The International Monetary Fund has also been mentioned, as a possible source of assistance.

But its role, if any, has still to be clarified.

The EU President, Jose Manuel Barroso, is warning that Greece, itself, must do more to deal with the present crisis.

Greece has responded positively, introducing new austerity measures, that will include gradually raising its retirement age from 61 to 63, by 2015.

Greece might be allowed to fail, if the world could be certain that the consequences could be contained.

But analysts point out  that Spain, Turkey, the United Kingdom, Portugal, Ireland and Dubai all have debt problems, too.  Some cynics, among them, are even starting to use the acronym STUPID, to describe this group of heavily indebted countries.

All would, certainly, be at greater risk if the Greek economy collapsed.

The consequences, if a run like that started, would be unthinkable.

So M. Trichet and his colleagues,who meet tomorrow,  will probably offer Greece some help.

But any assistance would, certainly, come at a high social price.  Austerity would be the name of the game in Greece, for several years.