The European debt crisis is still with us. Greece has still not finalized a deal with private creditors and a deal must be made quickly if Greece is not to default - a sword of Damocles hanging over both parties.
The uncertainty over the Greek situation sent stocks tumbling on Wall Street.
Over in Japan, businessmen are making preparations for the eventual collapse of the euro and are planning to divert their products to Asian markets where demand is higher.
In recognition of the crisis atmosphere, IMF chairperson and former French Minister of finance Christine Lagarde addressed the German Council of Foreign Affairs in Berlin, invoking memories of 1930 and warning against the danger of "inaction, insularity and rigid ideology" combining to cause a collapse in global demand. Christine Lagarde attacked euro zone policymakers for failing to tackle the problem with alacrity and making matters worse.
She implicitly criticized the inadequacy of the European bailout funds and called upon the Europeans to build a bailout fund of nearly €1 trillion. This would be double the current amount and would suffice in the event that both Spain and Italy require a bailout. As Germany is a country that will have to provide most of these euros, Lagarde's recommendations were discordant to the German ear. The recollections of 1930, alluding to the Nazi ascent to power followed by the Second World War, were necessary to make the Germans consider doing what they have so far opposed.
Another Lagarde proposal advocates the loosening of credit that will make it easier to stimulate growth. That will allow debtor nations more breathing space, as they will be repaying debts with cheaper money.
This, too, is bitter medicine for the Germans, who since the galloping inflation of the early 1920s under the Weimar Republic have always believed in sound money. However, without monetary easing Lagarde warns that the decline in growth could induce governments to adopt protectionist policies.
Lagarde was warning the Germans, whose economy is based on export industries. If governments adopt protectionist policies, Germany will be hard hit. Lagarde made the situation perfectly clear to her audience. "There can be no resolution to the crisis without Germany."