Mises Daily
May 12, 2010
The recently approved eurozone bailout package, designed to buy more time for fiscally troubled nations such as Greece, Spain, and Portugal, is nothing short of a global Greek tragedy in the making. Of course, quite contrary to this, judging by the response of global stock markets, one would get the impression that happy times are around the corner. However, those of us who understand Austrian economics and believe in free markets and sound currencies can see one more nail driven into the coffin of paper fiat currencies such as the euro, US dollar, British pound, and Japanese yen.
Rescue plans these days don't muster up much confidence unless they are at least around the trillion-dollar mark. Sure enough, the announced package was just shy of a trillion dollars, in an effort to, at best, kick the can down the road by three years. In all, the EU and its member countries would kick in EUR 500 billion ($650 billion) while the International Monetary Fund (IMF) will chip in with EUR 250 billion ($325 billion). In addition to these measures, the Federal Reserve agreed to an unlimited dollar-swap agreement with the European Central Bank (ECB) to help contain any unexpected surprises in the coming months from the European debt crisis. The final price will almost assuredly be greater than one trillion dollars; governments are notorious for rosy deficit projections past the current budget year.
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