Economic “Firewall”

Government economists in Berlin are seeking to build a “firewall” to prevent the debt crisis facing Greece from spiralling out of control and dragging down the Eurozone. “A German government official said that the steep decline in the euro and pressure on bond prices had forced Berlin to ‘take a significant step’ in how to deal with the crisis. Germany is worried that any flight out of Greek assets, especially government bonds, could hit its banks and those in other eurozone countries. As the eurozone’s dominant economy, Germany would be expected to take the lead in marshalling financial support for a Greek bail-out. There are fears the crisis could spread to other eurozone states with big deficits such as Spain and Portugal. ‘We’ve had to face up to the fact that what is now a Greek problem could turn into a European one,’ the official said. ‘We’re thinking about what we should do if the crisis spills from Greece into other euro countries. So it’s more about finding firewalls, containing the problem, than principally about helping the Greeks.’”