Should sovereign nations be bailed out?
| 09:21 UK time, Monday, 3 May 2010
Increased taxes, a raised retirement age and pay freezes are just some of the factors that pushed angry Greeks onto the streets of Athens this weekend against the agreed.
The Eurozone is not taking the news lightly and .
Doug Saunders writes about the ,
'Berlin today does not look or feel like an imperial centre....So you might understand why Germans, and their leaders, have been slow and wary to accept that their fortunes are now intimately linked to a circle of countries that have become economic colonies, and that this responsibility carries very large-scale, and non-optional, costs and responsibilities for the German taxpayer.... the front page of Bild, the flamboyant Berlin tabloid that represents a window into the country's unguarded id, went apoplectic: "Billions for Greece: What's In It For Us?" it asked in three-inch-high type.'
If you are part of a community like the EU, is it fair for your country to have to bailout other members? Is that part of the deal? What if your own country was in financial crisis?
Germany's concern,
'"Austerity" and "Greece" don't go easily in the same sentence. That's my chief reason for skepticism about the bailout-austerity package. It goes against the freewheeling, boisterous national spirit that makes Greece such a delightful place to visit -- and such a nightmare for finance ministers from the more uptight, less spendthrift countries of northern Europe.'
But Greece still has a choice - abandon the Euro and default on the bulk of your debt -it worked for Argentina.
the EU had to bail out Greece - we're too interlinked to let Greece go under.
The readiness of the EU single currency group to show solidarity with Greece is not altruistic. Were the speculators to succeed in pushing Greece out of the euro area, EU banks heavily involved in Greece would be hit hard. The resulting crisis turning a severe Greek recession into a slump would also weaken the already fragile economic recovery elsewhere in the EU.
Some young Greeks are particularly for building up a mountain of debt and feel it's unfair that they are being penalised.
Have the EU done Greece a favour or has it saved itself? Should a sovereign country ever be bailed out?
