In Europe Only the Politically Impossible Solutions to the Euro-Crisis Offer Fiscal Sanity and Moral Responsibility

Greek Prime Minister Antonis Samaras will be meeting with eurozone leaders this week in the hope of convincing them to extend the deadline for austerity measures to be met. The Greek government is hoping that international creditors will hand over $38.8 billion next month. Without the funds Greece will almost certainly have to default on its debt. That Samaras is engaging in these meetings indicates that he is not confident that the troika audit will deliver good news.

If the troika audit does not recommend more Greek bailouts European politicians will rush to make the next move. The problem is that there is no agreed upon strategy for what to do if Greece did not meet the austerity conditions.

One option would be to let Greece continue to receive funds regardless of the Greek government’s inability to get their budget under control. The German government is against this option and understandably wants some semblance of moral responsibility to be present in whatever assistance Greece might receive. While this attitude is prevalent in Merkel’s government, Merkel seems to be warming to the idea of letting the Greeks receive bailout funds without having met the previously agreed upon austerity conditions. This would set a worrying precedent. Italy and Spain are far from stable, and Greece getting bailed out without fiscal reform could send a signal that would only worsen the crisis. 

Finnish and German politicians have expressed their dissatisfaction with Greece receiving funds without having met austerity conditions. Both Finland and Germany have veto power over future bailouts, something that those in the Greek government should keep in mind.

The Germans in particular have opposed another plan, a favorite of French President Hollande and Italian Prime Minister Monti, the pooling of euro-zone debt through the issuing of Euro bonds. As some German politicians have pointed out, such a plan absolves responsibility of countries that engaged in feckless fiscal behavior and creates moral hazard.

Another realistic option is for Greece to default on its debt after the troika findings are released. This is hardly ideal, and not something the Greeks would welcome. However, taking the long-term view it is realistically the only way to slow down the fiasco that is the euro-crisis, though it would still leave many serious issues unattended. 

Whether it is Germany leaving the euro or the emergence of a different sort of currency, the politically impossible options still remain the most attractive. Unfortunately for the people of Europe the tepid and unimaginative realistic options available offer no cause for optimism or acceptance of culpability on the part of certain European politicians. A real comprehensive and just plan for addressing the euro-crisis requires many European politicans and bureaucrats to voluntarily resign and accept responsibility for the standard of living about to be imparted to hundrdeds of millions of Europeans. 

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  • Raston Bot||

    Troika will say some measures met, others unmet.
    Merkel will loosen eligibility for more aid.
    ECB will implement rate caps and make large bond purchases.
    Other central planning ideas will be implemented.

    rinse/repeat for many years. whole continent muddles through.

  • mad libertarian guy||

    THIS.

    And then of course all of the experts will claim that Europe is still unexpectedly slogging despite the best efforts of officials in the Eurozone. Of course they will never show their hand and admit that perhaps Europe is still slogging because of the best efforts of officials in the Eurozone.

  • ||

    The sad thing is that when Feeney makes asinine comments like "Without the funds Greece will almost certainly have to default on its debt." will never get proven false.

    "Oh wow we saved Greece from default" is what they will say. Even though it is a complete load of bullshit.

  • ||

    Without the funds Greece will almost certainly have to default on its debt

    Feeney You have written that in every article you have written about the Euro-crisis for the past month.

    I am calling you on it. It is bullshit. Every government financial crises i have seen is always fixed in the 11th hour. It is only a small minority who decide default is better then cuts.
    My guess is that once Greece is put up against the wall is the only time they will ever give serious consideration to the necessary cuts.

    Your argument really has no merit as it has no precedent. When has a 1rst world nation ever just said "fuck it we are going to default on our debt"?

    Never.

    It is all hand waving. Greece wants others to give them free shit...and as long as useful idiots like yourself continue to believe they are not bluffing the longer they will continue to beg.

  • califernian||

    Unlike California. Damn this is going to fun to watch here in the golden state.

  • ||

    California will not default. They, like Greece, will cut spending when the time comes.

    Still watching a bunch of democrats cut spending whining the whole time will be great fun.

  • Scarecrow Repair||

    I'm betting on some kind of back-door deal.

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