Greece seeks help as debt grows

Greece made another request for support from European finance ministers Monday, as the Mediterranean country struggled to get its ballooning debt load under control.

European leaders met Monday to discuss the possibility of extending Greece a lifeline if stringent austerity measures that the country implemented last week prove not enough to let it raise money on the bond market.

Greece needs to borrow $75 billion this year (almost half of that in April and May alone) to plug a gap between revenue and expenses to keep the country running. As its financial situation deteriorates, Greece has been forced to offer high interest rates to get investors to lend it money, exacerbating the country's debt problem.

So far, however, bond investors remain unconvinced — the spread between German and Greek government bond yields hovered at around three percentage points on Monday, a significant gap.

Last week, the country implemented wage rollbacks for public workers and sweeping tax cuts in an attempt to save several billion dollars. The plan won tepid support from financiers for showing the country is getting serious about its debt load, but it sparked nationwide strikes by angry citizens.

The government concedes that the cutbacks will worsen the economic recession this year as consumer spending is sure to plummet.

Greece says it is looking now only for "political" support — a vague pledge of aid should it be required down the line.  Greek Prime Minister George Papandreou has said that he will turn to the International Monetary Fund for a bailout if Greece's European allies won't lend a hand.

Credit ratings dip

Meanwhile, ratings agency Moody's Investors Service says the governments of the United States and Britain are more likely to see their credit worthiness downgraded than many other major economies.

In a quarterly report assessing the prospects of the triple A-rated countries, including Spain and the "less fiscally challenged" Denmark, Finland, Norway and Sweden, Moody's warned that the economic recovery remained fragile in many advanced economies.

AAA-rated governments face no immediate threat of a downgrade, the ratings agency said, but debt affordability is "most stretched" in the U.S. and Britain. Moody's recognized, however,  the "delicate balancing act" governments must undertake with respect to when to tighten fiscal policy and remove stimulus.

Britain is on course to borrow the equivalent of 12.8 per cent of gross domestic product in 2009-2010 — exceeding the 12.7 per cent forecast in crisis-hit Greece and far above the average six per cent rate for Europe.

In the U.S., the budget deficit this year is projected to be just under 10 per cent of the economy, meaning that the Treasury has to sell more and more bills to fund the shortfall.