ordered by the EU as a condition for the country receiving the rest of its bailout money. As Washington watches the situation unfold with unease, US officials are voicing an increasing amount of frustration that European leaders do not seem to have the situation under control. And the officials know that if the euro collapses, it could easily take the US economy down with it.
As Quatremer noted today, the euro has become such a powerful currency (now the second reserve currency of the world) that if it runs into trouble it would have a devastating impact not just in continental Europe but throughout the world.
Back in the 1970's when the US took the decision to take the dollar off the gold standard, the situation was watched intensely by the rest of the world. As the US treasury secretary noted at the time, "the dollar is our currency but your problem." Now, with the euro being used by a common market larger than America's, the opposite could be said to America. And the increasing grumblings suggest that American officials don't like being at the whim of decisions being taken across the Atlantic.
American officials are reportedly getting nervous, irritated and confused over the different answers they're getting over the need for a second Greek bailout (the European Central Bank said one should be prepared, but Germany disagrees and has called for restructuring). France and Luxembourg agree with the ECB and they have very publicly expressed their disagreement with Germany over this. Meanwhile nobody seems to be in the driver's seat, and the markets are growing increasingly worried that a potential Greek restructuring will take place in such a rudderless, chaotic way that the situation could spin out of control.
The markets have to a large extent already planned for a Greek default and if such a default were to happen in an organised fashion, they would probably ride it out. But the fear is that with such disagreement between the Eurozone's leaders, the default (or "restructuring" as Merkel likes to call it) will be chaotic and messy and the crisis would spread to the other PIGS countries (Portugal, Ireland and Spain).
Many economists are now predicting that if this does take place, it could result in a global economic catastrophe the likes of which hasn't been seen since 1929. Over the coming months, everything will depend on whether European leaders can speak with one voice on the euro. American officials appear doubtful that this is going to happen. After all, look at all the dithering and indecision that took place in the lead-up to the first Greek bailout. But what can they do? It's not their currency, though the economic health of their nation depends on the decisions that will be taken in the coming months across the Atlantic.
Perhaps there are some in Washington who are thinking that the euro gave Europe a global economic importance which the European project was not yet politically mature enough to handle. There are probably those who want to ride in on a white horse, jump in and tell the Europeans, "ok, here is what you're going to do". It may just come to that. But for the moment, European leaders continue to struggle to speak with one voice on this monetary powder keg in the Balkans.