It's not as though commentators all cheered the $1 trillion EU bailout plan to begin with
. Now, just one day later, they're really skeptical. Most analysts following the European saga have decided that the plan is not going to solve any long-term problems, and may in fact
exacerbate them. Here's why:
- Transfers Risk from State Finances to 'Global and Social Politics,' argues Paul Mason
for BBC News. With the bailout, "not only is the EU now committed to
much stronger fiscal ... oversight. It is now implicitly committed to
becoming an economic super-state." The problem is that "big states have
bailed out little states and will demand reforms that change the
lifestyle of people in these states forever. Northern Europe has
effectively seized control of southern Europe." But are Europeans going
to "accept the consolidation of the eurozone, with the loss of economic
sovereignty that represents?"
- New Austerity Measures Scrap the Social Contract in Southern Europe The Washington Post's Howard Schneider
calls the bailout "a political gamble with an uncertain outcome: that
European governments will rewrite a post-World War II social contract
that has been generous to workers and retirees but has become
increasingly unaffordable for an aging population." In Italy, Greece,
and other struggling southern European countries, "unions and socialist
movements have established generous work rules and social welfare
- And That's Why the Markets Are Reacting Badly "Confidence in the plan lasted only a day," notes a grim Douglas McIntyre for 24/7 Wall St. The reason lies in anxieties over social unrest:
market now fears that if Spain and Portugal get Greek-like packages,
that their leaders may approve the packages, but that this will only be
followed by national unrest. People who have enjoyed the benefits of
free-spending governments which have provided entitlement programs will
fight to keep them. They will also work to keep their underground
economies and ability to dodges taxes in place.
- 'If Solidarity Goes, Europe Goes' sings The New York Times' Roger Cohen
in a particularly dark column. He calls German chancellor Merkel's
"delaying tactics ... shameful, costly--and revealing." Germans are now
wary of solidarity, even though "European solidarity was once Germany's
route out of post-war shame." The "core problem" here is that "the
euro has bound vastly disparate nations in a halfway house where
monetary and fiscal policy are not under unified direction" without
solidarity, that problem is only going to get worse.
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