A worried world leans on eurozone leaders

Athens, Syntagma Square:

“kill the IMF” was the graffiti scrawled onto the pavement in front of the Greek Parliament. Here on a day of total public transport strike, with no taxis, trains, there were students, lecturers, teachers, coastguard and even a troop of policeman marching around the Athens main square the day after ultra-austerity turned to hyper-austerity. The riot police sported gas masks, as did the Black Block protesters.

If you spend time in Greece, you find a country that seems up against reasonable limits. One protesting tax collector, who has just packed off her son to university in London to escape Athens suggested to me that Greece was on the cusp of an Argentina moment. “the mothers and grandmothers are ready to take to the streets with their pots and pans,” she said. Much more on this in the coming days.

But today it became abundantly clear that what started as a containable Greek crisis is now in danger of spilling out of the control of nation states. That’s why we saw the extraordinary letter to President Sarkozy from David Cameron and five other G20 leaders that none-too-subtly sought to bounce a dithering eurozone into decisive action.

So we have US Treasury Secretary Tim Geithner, the IMF, the World Bank and six g20 leaders, all piling the pressure on euroland. And the world’s stock markets are in agreement. Sharp falls of 4 and 5 per cent around the globe as key measures pointed to a eurozone recession, a slowing even in fast growing economies like China. And from America the $400bn Operation Twist an attempt to boost the US economy by lowering long term interest rates… Overshadowed by the dire economic outlook.

The problem is not that markets are presuming Greece will default which they are more or less. It’s not even that other indebted eurozone nations will follow. It’s the knock on impact of that assumption on Europe’s banks that is expanding a small country’s woes into a global crisis of confidence. A crisis that the rest of the world feels requires a massive intervention from leaders of the eurozone.

But it’s Berlin that calls the shots in euroland, and perhaps today’s letter should have been sent to Chancellor Merkel. She discussed the crisis with Pope Benedict today (don’t forget the Vatican is in the eurozone with highly sought pontiff embossed coins). Divine intervention, possibly. And many world leaders will be hoping it results in a more forgiving attitude from Europe’s paymasters to its mediterranean debtors.