The European Union is bailing out Greece. Fearing financial contagion, EU’s policy wizards decided to throw 100 billion euros at Greece, in tandem with demands for austerity.
New spending restrictions are tough enough to elicit the verdict of “savage” from Greece’s public employee unions. But are they “savage” enough?
The euros-to-the-rescue scheme occurred only after collapses of Portuguese and Spanish bonds. As mentioned last Friday, things aren’t good on Europe’s other southern peninsulas, either.
The “Domino Theory” remains a dominant metaphor. Once, we feared countries would fall like dominos to communism. Now, it’s like dominos into insolvency.
But propping up a tipped domino isn’t easy.
Drastic solutions, like expelling the duplicitous Greek nation-state from the EU? Not on the table. The apparent aim of the bailouts? Keep as many of the major players responsible for the fiasco in as good a shape as possible.
If, on the other hand, every politician were fired and every contract with unsustainable giveaways to public employee unions were dissolved as part of bankruptcy, might future policy makers be a little more cautious?
Meanwhile, the dominos keep falling. The day after announcing the bailout, the euro plummeted.
My question: What happens when “too big to fail” is applied not to a tiny country like Greece, but to the good ol’ US of A?
What if we’re too big to bail out?
This is Common Sense. I’m Paul Jacob.