Wednesday, May 12, 2010

Trillion-dollar euro rescue won't solve low growth

You think?
A bold $1 trillion rescue by the European Union halted the slide of the euro on Monday and sent markets soaring worldwide in a gambit that may ultimately be seen as the moment Europe truly became a union.

The sweeping cash injection was greeted with euphoria on Wall Street, where stocks rocketed to their biggest gain in more than a year.

Still, the package did not resolve the basic dysfunction at the heart of Europe's monetary union: Governments can still spend recklessly and saddle their partners with the bill.

The approval of a "shock and awe" level rescue package followed weeks of indecision that hammered the euro and sent world markets plunging on fears Europe's debt contagion could spread well beyond Greece, where the crisis began several months ago.
You can't spend your way out of a recession and you can't bailout a nation permanently. Eventually, the bailee will come back, hat in hand, for more money.

No comments: