Author: Der Spiegel

The current Greek crisis has shown all too starkly the limits of the euro zone’s sanction and support mechanisms. If the monetary union is to have a future, it needs new rules to keep members in line and bail them out if necessary.

Europe is in the worst crisis of the postwar era. For months, the governments of the European Union member states have proven to be incapable of developing a convincing solution for the serious debt problems of individual countries, as well as for the reduction of imbalances within the monetary union. Uncertainty among investors has grown in recent weeks, which is primarily attributable to the helplessness of political leaders, and only secondarily to the influence of speculators.

The banking crisis of the fall of 2008 teaches us that case-by-case bailout packages approved in response to market pressures fail to have the desired effect in the event of a massive crisis of confidence. At the time, it took the comprehensive approach of the Financial Market Stabilization Act to finally bring about stabilization in Germany. Today, the euro zone needs a common strategy that successfully combines sound public finances with solidarity between member states.

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The Greeks are mainly responsible for their current predicament. But the German government has made the country’s situation worse with its lectures and reluctance to provide assistance. Chancellor Angela Merkel is mainly to blame for the fact that German taxpayers now have to suffer.

“Anything that can go wrong will go wrong.” This piece of wisdom, known as Murphy’s Law, currently applies extraordinarily well to economic policy in the euro zone.

On the one side there are the Greeks, who clearly still do not have their financial statistics under control and who produce one false report after another about the country’s budget deficit. On the other side are the Germans, who delight in hindering a rapid and unambiguous European response to the Greek crisis — in the process driving the cost of a solution through the roof.

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The European Union may have a plan to save Greece should the need arise, but leaders are insisting that they will never have to use it. Still, German commentators say that the plan spells the end of the stability pact, designed to prop up Europe’s common currency.

The 16-member group of European Union countries who use the euro agreed on Monday that — if push comes to shove — they would mobilize to help out debt-stricken Greece, a fellow euro-zone member. But by Tuesday, EU ministers were insisting that the contingency plan to rescue Athens would likely never be enacted.

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See Also:

• France Slams On The Brakes On Euro Bailout Fund
• Greece Bags $5 Billion From Investors Offering Killer Yield As Investors Bet On ECB Backing
• Resolute In Athens: ‘We Won’t Pay For The Crisis’