The $146 billion bailout package approved this weekend for Greece is advertised as a move to “stop the worst crisis in the [euro]’s 11-year history,” but it is having exactly the opposite effect.
Tim Cavanaugh outlines five reasons why:
- First, the bailout, which effectively kicks Greece’s pending default forward, has not solved the problem that the cost of debt service for the PIIGS countries is increasing.
- while German Chancellor Angela Merkel is taking credit for bringing in International Monetary Fund support and forcing some tougher fiscal-cleanup conditions on Greece, the bailout does not address the counterproductive elements in Greece’s own so-called austerity package, including currency controls and cash-transaction limitations that will only slow the country’s economy.
- the move has only irritated German and French voters who are outraged at having to pay for the wastrelsy of a country that, it is now clear, should never have been a euro participant in the first place.
- the status of the euro itself has been undermined, not strengthened, by the bailout.
- As they have shown throughout this crisis, Greece’s strong and ancient socialist institutions can only respond to market discipline with violence.
Go read the rest of the post.
Bailouts don’t work: Greece’s Costs Exceed Bailout:
And yes, I know that PIIGS Not Kosher at Barclays Capital; now say “Portugal, Italy, Ireland, Greece and Spain” fast three times.