Democracy Casts Doubt on Aid for Greece

[jbg]

The Euro-Zone, or shotgun marriage of very dissimilar European states, is now in train-wreck mode. Greece is the immediate problem but financial mayhem in Greece, Spain, Ireland and Portugal are creating demands on more prosperous and/or more frugal countries. The New York Times article, excerpted below (link) (note portions I have highlighted) shows how inconvenient mere voters are as obstacles for leaders seeking to force unwanted costs for bailouts on their citizens.

A Small Country Finland Casts Doubt on Aid for Greece

August 28, 2011

By JACK EWING AND LOUISE STORY

FRANKFURT France and Germany may effectively run the European Union, but Finland has been demonstrating how even a small country can disrupt their grand designs.

By insisting that it receive collateral from Greece in return for aid, Finland is threatening to upend an agreement that euro zone countries, led by France and Germany, made in July to expand the E.U. bailout fund.

Finland would contribute less than 2 percent of the guarantees provided to the fund, known as the European Financial Stability Facility. But the countrys demands, the subject of intense negotiations in recent days, threaten to derail the fragile consensus that is preventing Greece from defaulting on its debt.

Finland is the most vivid example of the way domestic politics can become Continental problems, threatening the unity of the 17 euro zone members as they face their deepest crisis ever. But Germany, the Netherlands and Austria all wealthy countries with strong economies also harbor deep opposition to bailing out Greece, Portugal, Ireland or any other country that may become overwhelmed by debt.

In countries like Finland the opposition to what are described as bailouts is huge, said Philip Whyte, senior research fellow at the Center for European Reform in London. Governments are politically constrained.

In Finland, Prime Minister Jyrki Katainen faces discontent within his governing coalition as well as pressure from a nationalist opposition group, the True Finns, which rode euro-skepticism to big gains in April parliamentary elections.

Finland is just one of 17 euro zone countries whose parliamentary approval is needed for the expanded bailout fund and whose domestic politics could upset the process. The case of Finland points to a bigger governance problem in Europe, said James D. Savage, a professor at the University of Virginia who has published a book on European monetary union.

You have all these multiple veto points,

so they cant come to a reasonable conclusion

, at least not easily, Mr. Savage said. You have increasingly less efficient decisions that are being made.

European squabbling has contributed to market turmoil around the world and alarmed policy makers.

It certainly is not unreasonable that Finnish taxpayers who have done nothing wrong object to bailing out a crooked, corrupt Greek government. Even if the government of Greece is not guilty of wrongdoing, the Finnish taxpayers have no logical interest in allowing Greeks to live beyond their means, to satisfy competing politcal demands tugging at the Athens government.

Maybe governments have to face inconvenient truths, such as accountability to their own citizens.

I submit that the ultimate payors for this failed system of European socialism/statism are U.S. and Canadian taxpayers. When we are asked to chip in the answer should be "no". I am in no mood for another Marshall Plan. The first one was a colossal enough waste.

Edited for spelling error

Edited August 28, 2011 by jbg

[Bonam]

I submit that the ultimate payors for this failed system of European socialism/statism are U.S. and Canadian taxpayers. When we are asked to chip in the answer should be "no". I am in no mood for another Marshall Plan. The first one was a colossal enough waste.

Edited for spelling error

I dunno who is gonna be the ultimate payer, but for right now its some easy profit. Greek bonds are yielding 18%.

[TimG]

Greece is the immediate problem but financial mayhem in Greece, Spain, Ireland and Portugal are creating demands on more prosperous and/or more frugal countries.

What gets lost in the reporting is if Greece is allowed to default then many German and French banks would collapse since they are large holders of these bonds. This would precipitate a repeat of 2008 with Europe as the central actor this time. Edited August 29, 2011 by TimG

[jbg]

What gets lost in the reporting is if Greece is allowed to default then many German and French banks would collapse since they are large holders of these bonds. This would precipitate a repeat of 2008 with Europe as the central actor this time.

Frankly it's going to happen one way or another. Europe and eventually China are going to shake out. Why should we pay as a result?

[surew2]

The way criminals come to Europe

A friend of mine from EUROPOL told me that the agency recently presented a report for only internal use which describes the criminal situation in Europe. According to it the most active, fierce and impudent criminal groups are created and formed by Caucasians, especially by Chechens, who got a refugee status in EU. The most interesting fact of the report is that Russian liberal opposition helps those criminals get papers that confirm their status of refugees so they could easily enter Europe and become here privileged foreigners and get social support here. EUROPOL put a special emphasis on the fact that organizations which support liberal opposition in Russia in the point of the fact support the creation of organized crime activity in EU. So this way Europe supports Russian liberal opposition that in its turn help criminals from former soviet republics come to EU. This is additional burden for European police since it already has a lot of troubles with migrants from Middle East.

[Handsome Rob]

What gets lost in the reporting is if Greece is allowed to default then many German and French banks would collapse since they are large holders of these bonds. This would precipitate a repeat of 2008 with Europe as the central actor this time.

How much in credit derivatives were sold against Greek debt? It may turn out to be more than just German & French banks.

[jbg]

How much in credit derivatives were sold against Greek debt? It may turn out to be more than just German & French banks.

To paraphrase the Eagles in Hotel California, "we haven't had that spirit here since 2008".

[dre]

Frankly it's going to happen one way or another. Europe and eventually China are going to shake out. Why should we pay as a result?

Countries are helping Greece out of altruism, they are doing it for themselves, because big collapses in the economic system cause problems for EVERYONE... not just the country collapsing.

This is the exact same reason that the rest of the world has been bailing out the Unites States for the last 30 years to tune of 20 or 30 TRILLION dollars. They know that if the US collapses their own economies will be damaged as well.

[olp1fan]

riots in canada if harper decides to help bail out europe

[Handsome Rob]

riots in canada if harper decides to help bail out europe

Blind to the danger are you?