Greek debt crisis affects Europe, world economy

Simon Tilford, chief economist at the Centre for European Reform in London, says the Greek crisis reflects a larger economic problem in Europe. EU members like the Netherlands and Germany have spent too little and their economies are driven by exports. Meanwhile, southern economies like Greece and Portugal have spent too much and amassed debts as a result. "So in order to find a lasting solution, we need change on both sides. we need countries that have been hard hit in the south - such as Spain, Greece, Portugal, Italy - to take reforms to boost productivity growth, to cut costs, to manage their public sectors more efficiently," he said. ...Ultimately, Tilford says, the Greek problem reflects a world economic problem. "The eurozone s really just a microcosm of the global problems we see. So unless we see the big countries in East Asia rebalancing away from exports and toward domestic demand, we are not going to generate a self-sustaining global economic recovery," he said. But Tilford does not believe Europe is ready, or willing, yet to undertake fundamental economic reforms he thinks are needed to right these imbalances. The region may rescue Greece, he says, but it will only be putting a bandage on a far bigger problem.