Only a month after Dubai was rescued by its neighboring emirate Abu Dhabi, Germany, France and other European powers are discussing whether Greece might need a bailout too.
After a decade of debt-fueled profligacy, Greece is confronting what amounts to a run on the bank. And, despite repeated assurances from Athens, the nation’s strained finances have put already jittery financial markets on edge. On Thursday, the worries stretched all the way to Wall Street, where the stock market sank 1.1 percent.
Some economists worry that Greece’s troubles could have deep and lasting repercussions for Europe. The crisis poses complex challenges for the euro, which Greece adopted in 2001. The currency sank to a six-month low against the dollar and yen on Thursday.
“Greece failing is not an option, and lots of people think that we will have to intervene at some stage,” said one European finance official, who was not permitted to speak publicly on the matter. “It doesn’t have to happen, and we hope it won’t, but it would be better than seeing a default.”
The shape and scale of a bailout package, if any, has yet to be determined, according to officials in several European capitals. Whether the International Monetary Fund might become involved is uncertain. Some European leaders want Europe to fix this problem itself, while others are open to working with the I.M.F.
Publicly, neither Greece nor its European neighbors say a bailout is being considered.
“There is absolutely nothing to these rumors,” a German finance ministry spokeswoman, Jeanette Schwamberger, said in an e-mailed statement from Berlin. “They are without any foundation.”
Source: http://www.nytimes.com/2010/01/29/business/global/29bailout.html?pagewanted=print 
