The Hill News

The Eurozone is experiencing a perfect storm - a debt crisis, a banking crisis and a growth crisis. Consequently, the Eurozone needs to consummate a massive and comprehensive debt restructuring and bank recapitalization plan to survive and avoid a banking crisis. 

The debt of “peripheral” Eurozone members is overwhelming. When the Eurozone members entered into The Stability and Growth Pact in 1997, they committed to maintain fiscal deficits of less than three percent of GDP and keep total sovereign debt at less than 60 percent of GDP.   They are not even close to meeting this commitment. Italy’s percentage of debt to GDP is more than 130 percent and Greece’s percentage is more than 150 percent. These countries cannot grow their way out of a debt problem of this size.

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