Despite all the huffing and puffing about German fiscal austerity, I still say Greece is poised for a bailout. I don’t see why so many doubt this outcome. For this is the age of bailouts, and unlike the Asian Crisis, Greece’s fissures are transpiring at a time when the entire globe is sweating its checkbook. And while there is never a good time for a rupture in the world’s largest economy, now would be an especially perilous moment for a full EU crisis. Let’s just say it would be more than a local snafu.
The Greeks are also lucky they’re the first ones to the trough. The PIIGS are about to play musical bailouts, and I cannot help but think one is going to wind up being the EU’s Lehman.
Wasn’t the EU supposed to strengthen all participants and provide a bulwark against U.S. unilateralism? One might now retort that it has actually weakened the stronger nations like Germany (especially) and France by shackling them to the mawing moneypits of the Mediterranean. If we believe a team is only as strong as its weakest member, what did Germany (until recently the world’s largest exporter) gain by adopting a litter of subprime dependents? Deutschland didn't need Greece any more than the U.S. needed its ungainly timeshare in Iraq.
The birth of the EU appropriately coincided with the “bigger is better” zeitgeist that ruled our financial system for the last decade. Tell me some of this doesn’t sound familiar: Don’t worry about the balance sheets of the parties involved. Don’t read all the fine print about handling those who break the rules. Packaging everyone together disperses everyone’s risk. Just e-x-p-a-n-d. If any problems arise, we’ll just grow our way out of this. The EU aimed to enhance European security. Funny how much that sounds like securitization.
Thanks to its captivity in this unholy union, Germany is now partly beholden to Greece for its own stability, as Greece’s fortunes greatly impact the euro. And so it shall be with Portugal and the rest of Cellblock EU. Lest anyone fancy America exempt from similarly hazardous pacts, take a look at how our borrowing has increased our dependence on states like Japan and China. For years, neocon doctrine insisted “deficits don’t matter,” and that we needed “energy independence.” The neocons also declared that it mattered not what the rest of the world thought of America’s Middle East adventures. After all, we had to preserve our “national security” at all costs. Well, the deficits incurred under those termites have left America with treasonous debts, which of course have made us far less secure and much less able to act without considering our creditors. Instead of chasing fever dreams like “energy independence,” perhaps we should have focused on things found in the waking world…such as CREDIT INDEPENDENCE.