The E.U. announced over the weekend that they (and the I.M.F.) have put together a $1 trillion bailout for Greece and the other Euro-zone countries having debt problems.The European and US stock markets responded with major upswings yesterday, but I cannot for the life of me figure out how this is a solution to the problem.
Aren't the policy-makers --- yet again --- simply printing more money and thereby "kicking the can" of having to confront the debt further on down the road?
Anne Applebaum explains, in her Post piece this morning (here), some of the things that Greece's government has promised to do in exchange for the dough:
Europe and the International Monetary Fund will spend billions of euros to rescue Greece. And in exchange, Greece will not merely agree to reduce its vast public deficit but will adopt, by June, no fewer than 17 specific legal and budgetary changes. Among other things, the council declares that Greece "shall" reduce the "Easter, summer and Christmas bonuses" of civil servants and pensioners; increase taxes on fuel, tobacco and alcohol; reduce the operating costs of local government; and pass a law to simplify the rules for new business start-ups.Won't the Greek public push back incredibly hard on many of these requirements - particularly raising the retirement age by 4 years? The US government cannot muster the courage to raise our Social Security retirement age by even 1 year!!
Once all that is out of the way, Greece "shall," by September, fulfill nine other requirements, among them a pension reform that raises the retirement age to 65, from a current average of 61. By December, Greece "shall" adopt 12 additional measures, among them one mandating the use of generic drugs in the state health-care system. There are further deadlines in March, June and September 2011. If the Greek government wants to continue receiving the cash it needs to function, it will have to pass all of this legislation, piece by piece.
