Greek Bailout Already Making Situation Worse

by Tim Cavanaugh

Reason
May 2, 2010

The $146 billion bailout package approved this weekend for Greece is advertised as a move to "stop the worst crisis in the [euro]’s 11-year history," but it is having exactly the opposite effect.

We have to keep the money flowing or these people might go commie. First, the bailout, which effectively kicks Greece's pending default forward, has not solved the problem that the cost of debt service for the PIIGS countries is increasing. That's in part because this is not actually a problem. The question is not why Greece has to pay such a high yield on its bonds but why Portugal and other on-deck defaulters have to pay so little. The bailout was supposed to put debt buyers at ease about Europe's overleveraged states, but because it only allows these countries to take on more debt, it has not.

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