Bailout Blues

Busted Bailout

The Bailout Bias

Why the Greek Bailout Failed

Because there is no current blueprint for this move, one can only speculate about what it would look like. One option is for large EU countries to construct a bailout package.

Against this background, it seems inconceivable that the EU should refuse to support an EMU member in a situation similar to that of Hungary and Latvia, especially as all the countries that are currently on market watch lists are long time EU members. In case of real distress, the rest of the EU will offer a bailout package.

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Finally, Germany, Spain, Italy, and several northern European countries required, for domestic political reasons, a ritual humiliation of radical Greek politicians and voters who openly defied EU institutions and austerity demands. Having achieved this, EU leaders have no further reason to impose austerity on Greece or strictly enforce the terms of the latest bailout.

It took decades, if not centuries, for them to obtain sizeable public budgets and begin engaging in income redistribution. And both prohibit the kind of fiscal or monetary bailout operations for single states or cantons that the EU pursued during the financial crisis.

One option is for large EU countries to construct a bailout package. Alternatively, the EU could create a special facility through which it borrows money in the bond market to help the member in trouble an arrangement similar to the bonds that the European Commission has already issued for the emergency facility from which Hungary and Latvia have been borrowing.

In May 2010, Greece s GDP had fallen by 4 year on year. The EU and the European Central Bank predicted that the first bailout program would drive Greek GDP down by another 3 below 2010 levels, before the economy began to recover in 2012.

Indeed, the no bailout clause in Article 103 of the EU Treaty according to which neither the European Central Bank, the EU, nor national governments shall amp 160 be liable for or assume the commitments for other national governments has lost its credibility. The political and economic costs of letting a fellow member government fail are simply too high in the closely interconnected EMU.

The EU would invite non EU states to do likewise

EU PROPOSAL

After a bank s shareholders are wiped out and its creditors take an 8 haircut, the European Fund transforms itself into a bailout fund, justifying some of Germany s fears. And there is no explicit prohibition of some form of national government bailout.

The EU and the ECB are worried about the moral hazard of any bailout. But that is precisely why a credible IMF program that ties financial support to the progressive achievement of fiscal and structural reform goals is the right way to teach Greece and the other PIIGS how to fly.

Will the bailout work? We have national debt, Detroit, currency valuations, healthcare, all these issues facing us.

Blair s EU disaster

Post EU Depression

EU European Union

Spain like Greece is spiraling into depression, and may need a full scale bailout by the troika (the ECB, the European Commission, and the International Monetary Fund). Meanwhile, austerity fatigue in the eurozone periphery is increasingly clashing with bailout fatigue in the core.

The UK is one of two EU countries (alongside the Czech Republic) that refused to sign this fiscal compact, acceptance of which is required to gain access to European bailout funds. But Britain s government has the identical aim of reducing its current deficit of 10 of GDP to near zero in five years.

Moreover, such a bailout could undermine the ECB s trustworthiness as guardian of the euro s stability, particularly in light of the new political power that it would obtain. And it would further undermine the rule of law in the EU at a time when confidence in the Union s governing treaties is already fragile.

Britain s Last EU Straw?

A Better EU Budget

Politicizing EU Competition Policy

Righting the EU Constitution

The EU vs. Democracy

Statement of the EU

The fact is that only the US and the massively over represented countries of the European Union supported the Greek bailout. Indeed, the major emerging economies all strongly opposed it, with the Brazilian representative calling it a bailout of Greece s private debt holders, mainly European financial institutions.

The Challenges Of EU Enlargement

26 http europa eu un.org.

In the EU, deadlines for the application of HACCP depend on national endorsement of the EU regulations.

How to Make EU Integration Popular

Putting Europe into the EU Budget

The Economic Governance the EU Needs

The EU Moves Ahead At Last

Who Needs to Be EU President?

The publication of some additional information is encouraged, for example, in the EU public procurement directive (the EU directive ).

The European Commission's Market Access Database provides information on exports from the European Union (EU) to non EU countries.

The IMF learned this in 1997, when an inadequate bailout of South Korea forced a second round of negotiations. In Greece, the problem is even worse, as the 86 billion ( 94 billion) plan now under discussion follows a 110 billion bailout in 2010 and a 130 billion rescue in 2012.

More than half of the country s trade is with the Union, and Moldova receives significant EU financial assistance. Most Moldovan emigrants work in the EU, and almost 75 of Moldova s population support EU membership.

Limited capacity for debt socialization reflects the EU Treaty s no bailout clause, which bars outright mutualization at the eurozone level of (national) public debt. Moreover, the lending capacity of the new rescue fund, the European Stability Mechanism, is capped at 700 billion ( 905.6 billion), which represents only a fraction of the total public debt of the countries potentially needing financial assistance.

From Hubris to Nemesis in the EU

The EU Must Start Negotiations with Turkey