Those wily Europeans – sayin’ somethin’ but doin’ nothin’

This morning details of a Greek debt bailout package were announced by EU finance ministers.  If Greece is unable to raise funds in capital markets then the EU might elect to lend the troubled-nation €30 billion in loans at an interest rate of 5%.

Analysis: In previous postings on this blog, I heavily criticized the EU for including no details of any proposed bailout plan.  Effectively all they had said was, “we have a plan, trust us.”  Despite saying that the EU will lend 30 billion euros at 5% to Greece there still are not enough details to assess this plan’s potential efficacy.  For example, the plan lacks any specific triggering criteria that would have to occur before monies are lent to Greece.  More importantly, for the €30 billion to be lent to Greece it would require the unanimous support of all of the eurozone members – and that just isn’t going to happen.  Germany, for one, has been a vocal opponent of any bailout package.  But the Europeans have never experienced a single unanimous vote on anything of substance.  Circa 2004 the nations couldn’t even all agree to take the eurozone one step further beyond an economic free-trade zone into a single-unified political entity.  So this plan is not much better than what existed before and is still a poorly veiled financial markets pander fest.

This week sees Greece trying to raise money for its ailing government in the financial markets.  My thought is that the EU feels that the troubled nation will be able to raise money, especially if the auction has the imprimatur of an EU financial bailout as a back up.

Importance grade: 2; that the Europeans recognize that the financial markets require details is noteworthy.  That they basically unveiled a plan that will never be used is a poor excuse for governance.  Those wily Europeans have once again said something, but have done nothing.  Or as they say in the car biz: all show, no go.

Jason