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Greek Bailout Spins Toward Crisis; EU Leaders Still Feckless

As eurozone countries prepare to cough up the necessary funds for Greece’s bailout, the news that just one country — Finland — has struck a side deal with Athens to ensure Greece does not default on Finnish loans threatens to shake up the entire bailout.  The FT reports:

The Greco-Finnish collateral deal, reached last week between the countries’ two finance ministers, would force Athens to deposit millions of euros in cash into an escrow account, as insurance that Greece would not default on Helsinki’s portion of the rescue.

But the deal – tacitly allowed by eurozone leaders at their emergency summit last month – has reopened the debate over the entire bail-out, with some countries, including Austria, Slovenia and Slovakia, insisting they want similar deals.

The cluelessness of Europe’s leaders never ceases to amaze — and at this point, to frighten.  Of course when the Finns get collateral, voters in every other European country wonder why they can’t have some too.  And any signs that the Greek bailout will have to be renegotiated yet again will spook markets.  As Moody’s put it: “The message sent by the calls for such agreements confirms that Europe is conflicted over the very decision to provide financial support to its members.”

The tightfisted Dutch have no faith in Greece’s ability to repay, and under strong popular pressure the Dutch government is threatening to block the deal if the Netherlands can’t get the same treatment as the Finns. Since all eurozone countries must sign their approval of the deal, the Finnish side agreement threatens to kill it all off.

Americans disappointed by the mess in Washington should look across the Atlantic.  Compared to the clown college in Europe, American politicians these days look like the Founding Fathers.

Unfortunately, we are all in the same boat, and a leak in the European end of the lifeboat is bad news for the passengers on the American end as well.

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  • dearieme

    Greece is beyond rescue: the politicians are just manoeuvring to try to ensure that the blame for the denouement falls on someone else.

    The whole Euro adventure was designed and supported by people who must have been mad, stupid, ignorant, or reckless (these categories not being mutually exclusive).

  • Peter

    Dearieme said “Greece is beyond rescue.”

    It sure is, and it’s probable not only Greece..

    Aren’t these words of Yates spooky, Mr. Mead, given today’s environment:

    “Turning and turning in the widening gyre
    The falcon cannot hear the falconer;

    Things fall apart; the centre cannot hold;
    Mere anarchy is loosed upon the world,

    The blood-dimmed tide is loosed, and everywhere

    The ceremony of innocence is drowned;

    The best lack all conviction, while the worst
    Are full of passionate intensity.

    Surely some revelation is at hand;
    Surely the Second Coming is at hand. “

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