GREEK CRISIS NOW A EURO CRISIS !!!

Repeatedly making loans to an insolvent company or country is a very risky operation. This we have seen in the case of Greece which has been bailed out for the second time in one year. In the last two weeks the loans made to Greece have become "junk bonds" !!!

Was Greece again bailed out because it had solved or eradicated the fundamental reasons which forced it to apply for financial help in the first place, or was Greece bailed out again because the Leaders of the EU were terrorized, scared stiff, by the thought that the sacred EURO would lose face on the world's financial markets ? 

The very fact that new loans to Greece were again made, with low interest rates and on a long term basis, without any garantees like mortgages, reveals the fears of the EU leaders for the future of the EURO. However, the new loans did not cure the underlying structural faults in the Greek economy: too many civil servants being too highly paid !!! 

Before the final decision to grant the last loans to Greece, it was already generally known that Spain and Italy were also in dire straits.  These countries were watching what was going to be decided !!!  They were and are still watching because there are no rules in the EU treaties which specify what should be done when a EURO country becomes insolvent. This major loophole must be studied with great urgency, even during the current EU parliamentary recess !!!

I have long been of the opinion that EURO countries which are insolvent should temporarily leave the EU and abandon the EURO, readopt their former currency, then  officially convert all foreign currency debts and assets into the new local currency and then devalue the new local currency.  The net result would be, for example, that EU creditor countries would suffer losses on the balances outstanding with the insolvent country.

Banks and companies generally can book such losses against profits which would therefore soften the effect of the pretax loss.

If the EU solves the problems of Italy and Spain in the same way as the Greek problem, there will be melt-down in the EU !!!  Taxpayers will create revolutions everywhere when measures hurt !!!  In the end it is the taxpayer who always picks up the bill, not only for the unpaid debts of insolvent countries but also for the "junk bonds" !!!