Mother Jones
January 18, 2011
What should Europe do about its insolvent countries? Roughly speaking, the problem is fairly simple: Greece and Ireland are basically bankrupt, and Portugal might be too. Probably not Spain, but you never know. In any case, as long as these countries have to keep taking on more debt on top of all the old debt that caused their insolvency in the first place, they'll never recover. But if they default on their debts, the banks that hold their notes will implode. This is bad, because those banks are largely French and German, and France and Germany really don't want to see their biggest banks implode. So that means making good on the debt, which basically means that French and German taxpayers are bailing out Irish, Greek, and Portuguese taxpayers. French and German taxpayers aren't very thrilled with this plan.
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