Greece, Ireland, Portugal . . . What does it matter?
Well, for a couple of reasons.
By seeking a bailout from the Northern Powers (France, Germany, Sweden) these nations essentially become EU protectorates. They lose the ability to control their own finances, print money, change their interest rates and, far more important, to decide things democratically. They become appendages to the eye of the EU octopus—Brussels.
On the other hand, they can now afford to pay their public sector employees, pump some money into the economy and they can pay off the running interest on their debts. But whether this will actually lead to long-term competitiveness is dubious.
Neither of this first three nations has a very large economy or population. Greece has about 10 million people, Ireland about 4 million and Portugal about 10 million. 24 million people out of the over 500 million in the EU is no biggie, except for the fact that there’s only about 80 million in Germany, the largest funder of the bail outs.
So the new big question is . . . What’s going to happen to Spain, a nation of 46 million, with the 5th largest economy in Europe? Will it seek a bailout or is it “too big to fail”? And after Spain, what about Italy? (But by that time, there might not be any more possibility for bailouts.)
Naturally, the Spanish are saying there’s no need to worry. I remind you though that about a week ago I overheard on television the Portuguese prime minister saying that Portugal would most certainly not be needing a bailout, and yesterday it came . . . and back in 2010, people were much more worried about Spain than Portugal. Considering the state of Spain, I’m predict it’s only a matter of time.
These are destined to be interesting times for Europe. Its very future hinges on the fate of Spain. And not just economically. This could have huge repercussions for the EU in general; I suspect Euro-skepticism will rise in the coming years.