VOX
December 3, 2010
The Eurozone crisis is not over. This column argues that the bailout of Greece and the €750 billion Special Purpose Vehicle set up in May 2010 was the first step down the slippery slope. The first and only possible remedy is to reconstruct the no-bailout clause and let markets discipline governments; the EU has proven that it cannot.
It is amazing to observe European policymakers, having taken the wrong turn earlier this year, persevere in piling one mistake upon another. It all started when they decided that Greece could not be left to itself. Pressing on with this logic, they have brought the Eurozone to the point where it is contemplating a disaster of historical proportions.
Future historians will have to decide whether “saving Greece” was an honest show of solidarity or a crass attempt by the French and German governments to avoid another round of taxpayer-financed bank bailouts (see for example Baldwin et al. 2010). At any rate, this is when the disaster started.
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