Slow Mo Euro Woes

High ranking Greek officials have several times in recent days strenuously denied that Greece is considering leaving the Euro bloc. The strength and frequency of their denials leaves the distinct impression that Greece is thinking of leaving the Euro bloc. Although bailed out last year, Greece is still struggling. Maybe it's all just a wink and a bluff, but the Greeks seem to have gotten somewhere. Late last week, high level Euro bloc finance officials conceded that Greece would likely get a sweeter bailout.

The Irish government, fresh from being bailed out just six months ago, has put in its claim for more porridge if the Greeks get more. Seems that when it comes to bailouts, the bailees expect most favored nation status as a matter of course. The Euro powers will be hard put to deny the Irish equality in handouts, as an Irish departure from the Euro bloc could be as damaging as a Greek withdrawal. And it seems likely that Portugal, which just signed up for a bailout, would get an improved package along with Greece and Ireland.

The Euro crisis is pretty much playing out as predicted last year--the bailouts were inadequate and the bailees would return to the trough for more. Germany, France and the other wealthy EU nations will pony up. Their own banks hold large amounts of Greek, Irish, Portuguese and other funky EU sovereign debt, and a dissolution of the EU, even partial, could trigger big losses.

At the same time, however, the political waters in Europe have become more treacherous. A recent election in Finland, of all places, signaled that the anti-bailout interests are growing in influence. One might dismiss that as due to something in reindeer milk, except that anti-Euro groups through Europe are rising in the polls. The pro-EU politicians are drawing out the bailout process, apparently hoping that doling out the pain gradually over time will make the bailouts easier to swallow. But that also brings the problem back into the headlines time and again. The EU is bogging down in repetitive bailout syndrome. Whether its strategy of rationing pain slowly works, or becomes the death of a thousand bailouts, remains to be seen. The keys to EU prosperity--balancing the union's economic imbalances and spurring greater growth--seem consigned to the back burner. That gives the political scalawags room to dance, and they'll choose a danse macabre for the EU if they can.