The Eurozone financial crisis might spread beyond the G8 countries
The future of the Greek economy has been in jeopardy for a very long time. The ramifications are being felt across the European Union and there is talk of an untimely exit. Meanwhile Germany continues to prop up a number of countries who rely on the currency for stability. Nevertheless there is real concern that the world at large will be affected.
During a G8 meeting at Camp David, the leaders refused to countenance the possibility that either Spain or Greece might leave the Euro. Hopes of calming the markets seem destined to be disappointed however. There is rumor that Bankia which is largely controlled by the Spanish government is losing depositors and could even crash before recovering.
Years of mismanagement turn into a major financial crisis
The news of a potential collapse prompted the credit rating agency Moody’s to downgrade the creditworthiness of many banks in Spain. In Greece the middle classes have taken to the soup kitchens in an act of pure desperation even as the chances of creating a broad-based government fade. If Greece left the Euro, the Spanish question would continue to needle investors.
In response the European Union claims to have created a ‘firewall’ to protect vulnerable economies like Portugal. However the scale of the problem means that these measures may not be enough to deal with the potential disaster. In fact the easier prediction is that the departure of Greece might trigger a rise in the interest rates offered for Spanish public borrowing.
Pablo Trian of the Esade Business School speculates on the effects of a Greek exit on the Spanish economy: "If people start to believe that the possibility of a new peseta is not some crazy hallucination they might take out their Euros and put them somewhere else."  Gayle Allard from the IE Business School agrees that individual investors may decide to abandon the currency.
The European Commission makes contingency plans
Already the European Central Bank and EC are drawing up contingency plans just in case Greece decides to abandon ship. Karel De Gucht is the Trade Commissioner and was at pains to acknowledge the reality of the situation. However there mixed messages from Olli Rehn who is the European Economics Commissioner: "We are not working on the scenario of a Greek exit. We are working on the basis of a scenario of Greece staying in." 
There are 17 countries in the Eurozone. Britain retains the Pound Sterling but the nationalists there claim that they have been propping up the currency. The USA depends on trade from the Union and China will not be able to sell its cheap products in the EU if the economies there collapse. This local crisis is taking on global dimensions. That is why President Barack Obama has been enlisted to provide moral support (for now).
Europe must learn manufacturing again
One major theme that is running throughout these crisis points is the fact that Europe no longer makes things. That honor has been handed to China, Japan and the USA. Without a strong manufacturing base, these countries will continue to struggle. Relying on the Stock Exchange as the sole determinant of economic development is a dangerous strategy.
Can other parts of the world learn from this crisis? First of all the concept of ‘austerity’ politics no longer appears viable for the average voter. Nicolas Sarkozy and the Greek government paid the price. Others will continue to do so. South American countries are also learning about the true dangers of unbridled capitalism. Perhaps the world will turn to the Scandinavian Social Model as a compromise.
- J. Webb,” Fears mount as Spanish euro uncertainty grows”, 18th May 2012, BBC, http://www.bbc.co.uk/news/business-18117106
- V. Mock and M. Stevis,” 3rd UPDATE: ECB, Commission Working On Greek Exit Plans-De Gucht”, 18th May 2012, Wall Street Journal, http://online.wsj.com/article/BT-CO-20120518-708392.html