The bailout spiral

The bailout spiral

June 13th, 2012 in Opinion Free Press

The news that Spain's failing banks are expected to get up to a $125 billion bailout in order to keep the Eurozone from collapsing doesn't exactly having Irish eyes smiling.

You see, back in 2010, the European Union and the International Monetary Fund bailed out Ireland to the tune of $112 billion. But in the process, they required the Irish to agree to painful austerity measures. Greece and Portugal also were forced to accept austerity measures as conditions of their bailouts. (Rioting in the streets suggests those steps were, ahem, less than popular.)

Spain's economy is larger than the other European nations that have been bailed out thus far, so perhaps it had more clout in negotiations for its bailout. But whatever the reason, it will not be facing the same difficult rules and cutbacks that still have Greek, Portuguese and Irish tempers flaring.

And that uneven approach doesn't sit well in Ireland, at least.

It is demanding that it get the same treatment as Spain and that it be freed from austerity efforts. It wants to "ensure parity of the deal with Spain retroactively on its bailout ...," a European government official told Agence France-Presse news agency.

In effect, that would mean an additional bailout for Ireland.

Oh, and did we mention that up next for a bailout that Europe can't afford is Cyprus? Soon, it would seem, the question will not be which European nations need to be rescued from their reckless spending over a period of decades, but which ones don't.

That is putting wealthier and more fiscally responsible economies such as Germany's on the defensive, as citizens wonder why they are having to subsidize the irresponsibility of distant banks and governments.

You know, the same sort of questions that Americans asked when fantastically despised bank and auto bailouts were being shoved down our throats on this side of the Atlantic.

Lots of lawmakers here simply ignored those questions. Don't look for much better behavior by the unaccountable Eurocrats -- much less for the series of bailouts to turn around European nations' economies.