Greece's End Game

by Dalibor Rohac

Weekly Standard
June 22, 2011

Although Greek prime minister George Papandreou survived a vote of confidence last night, meeting the conditions required by the IMF for the disbursement of another tranche of aid to its ailing economy, parliament will have to pass another austerity package later this month.

But regardless of whether the package is adopted, the Greek government is basically insolvent – in spite of the massive EU bailout and a previous austerity program administered since last year.

It has become fashionable to blame the crisis of the euro on the notorious laid-back life style of the Mediterranean nations. However, ordinary Greeks are the innocent victims, not the perpetrators, in this tragic story. Blame should lie with European political elites for believing that a currency union was a desirable way forward, and for imposing this union on a group of nations as diverse as Finland and Spain. And, of course, a portion of the blame should be attributed to the foolishness of Greek politicians who overlooked the fundamental unsoundness of this monetary arrangement.

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