Far from protecting Europe, a second bail-out of Greece is likely to cost eurozone taxpayers three times the amount of the original by 2014

The debate over the Big Fat Greek Rescue has oscillated wildly between will-they, won’t they and can they can’t they. But now it’s beginning to shift into: should they, shouldn’t they?
The aim of the international mission has always been pretty clear, even if the method hasn’t: Athens must be shored up to protect Greece, the European Union, the euro, the European banking system, and the wider global economy.
Behind the first domino of default, the international authorities have mustered extraordinary support, including the €110bn bail-out agreed last May, plus two vast temporary loan guarantee schemes. Next up is the proposal for a second bail-out, expected to be a further €120bn.
Surely, reckon Europe’s directors, this will be enough to buy a happy ending to even the gloomiest Greek tragedy? But what if the vast support is funding, not the end, but another even more dramatic - and expensive - act of the play?
This is the conclusion of a report by Open Europe, although there’s no entertaining prose here: “This is a debt crisis and someone will have to take losses,” says the London-based think tank. In fact, a second bail-out will wind up costing European taxpayers three times the amount in the end.

 

 

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