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Monday, May 10, 2010
EU emergency fund is just putting off the inevitable
On Saturday German Chancellor Angela Merkel and Stephen Harper gave good advice to the industrial world, reign in your debt. Debt is a burden on every national economy and has nearly resulted in the collapse of Greece. The huge debt of these democratic societies is mostly due to ever growing welfare demands and putting off difficult decisions to a future date.
This seems to be the pattern everywhere. There is an almost universal lack of political will to make necessary cuts to ensure long term financial stability. Cuts are inevitable; eventually governments will run out of money, as Greece did. It is only a matter of time and the sooner something is done the better off everyone will be.
Sadly the Eurozone countries have not learned that lesson. They have taken measures not to enforce spending cuts and debt repayments, but to allow countries to continue to put off those tough decisions.
Yesterday it was agreed by Eurozone countries to create an emergency fund of a substantial amount of cash that is meant to prevent another Greek crisis. The problem is that now every government knows that this fund is there. Countries with shaky finances will be under less pressure to put their books in order.
Putting aside the morality of forcing taxpayers of one country to pay the debts of another country, this fund will not solve anything. All it will do is kick the need to reform down the road a little farther.
Europe should take the advice of Ms. Merkel and Mr. Harper and deal with the debt problem now, in a real substantial manner. Otherwise we will all be Greeks.
Posted by Hugh MacIntyre on May 10, 2010 | Permalink
Comments
It is also bringing the rest of the EU that much closer to their own day of reckoning.
Posted by: Floyd Looney | 2010-05-10 7:44:32 AM
Welfare / Nanny states have infantilized their citizenry. They make lousy parents because of democracy where the most popular "parent" is the one that never says no to their spoiled brats. Greece was just starting the process of approaching adulthood when the international statists jumped in to defer and enlarge the inevitable reckoning.
In governance, the word deficit is the inverse of discipline. There hasn't been much discipline in the world for some time. There is going to be a whole lot of spanking pretty soon. Hold on to your assets! The looters and thugs are coming!
Posted by: John Chittick | 2010-05-10 10:19:24 AM
John, how true. I was speaking to a man I respect a great deal, on economic matters, the other day about how dpressing it is to see the world slip more and more into socialism. He said yes that may be true, and it will get much worse before it gets better. Although not likely in my life time, it will one day get better.
The faster Greece and the EU self destructs the better for us all.
Posted by: TM | 2010-05-10 5:35:42 PM
The faster Greece and the EU self destructs the better for us all.
Posted by: TM | 2010-05-10 5:35:42 PM
Careful what we wish for. Europe is Chinas biggest trading partner and stock markets are global. If the EU falls apart it will make the crash of 2008 look like a non event. The"Piggs" have the ability to drag the whole world into a recession that is unlike anything we have ever seen.
Posted by: peterj | 2010-05-11 11:00:34 PM
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