Lagarde: The situation in Greece is a close call

In an interview with US television channel CBS yesterday, the chief of the International Monetary Fund, Christine Lagarde said that when you have a single currency and when you don΄t have a single or at least very closely coordinated fiscal policy then you run the risk of having part of the territory go into one direction and other part of the territory go into another direction. "And that΄s exactly what happened", she stressed.

Lagarde also noted that the divide exists between Northern Europeans -- the Germans, the Dutch and the Finns -- who are industrious, prosperous and frugal, and the Southern Europeans -- the Greeks, the Portuguese and the Italians -- who are much more relaxed about work, money, and paying their taxes.

Lagarde said it didn΄t matter much until 2008, when the global financial crisis rolled in, separating the savers from the spenders.

According to the chief of the IMF "you know, it΄s like when the tide goes away, you see those that do not have their swimming costume on. And that was the case in Europe".

The largest of the countries left totally naked was Greece. The nation of just 11 million people was a half a trillion dollars in debt and unable to pay its bills, leaving Europe with a Lehman Brothers-like dilemma: either bail the Greeks out or let them go broke, a risky proposition that could trigger another huge financial meltdown.

"There΄s still medicine to be taken. And that΄s what΄s happening in most of these Southern Eurozone states at the moment, plus Ireland".

The situation in Greece is a close call, let΄s put it that wa, Lagarde said.