- In order for the EU to bailout a country, there has to be a unanimous vote by all to do the bailout. Any country voting "no" stops the bailout.
- The Finns have become very hard to convince. They're even more fiscally conservative than the Germans and have lost all faith in the Greeks.
- Greece is now paying credit card interest rates on its debt. I didn't look up the numbers this morning, but it's in the 20-30% range.
- The Greek economy is contracting. That means while debt servicing payments are going up and tax revenues are going down.
- The Finns are literate and read the financial newspapers.
The case of Finland best shows us how flawed governance in the zone really is. The government in Helsinki, which leans against continued European bailouts, agreed to the second Greek rescue on the condition that it receive collateral for renewed financial support. Subsequently, the Finns and the Greeks worked out a special side deal in which Athens would deposit a chunk of cash in an escrow account for Finland to ensure Helsinki's support for the bailout. (If that arrangement – Greece putting up cash to get more cash – doesn't make any sense to you, that's because it doesn't.) But that bilateral deal quickly fell apart. Germany opposed it, while other euro zone nations, including Austria and the Netherlands, understandably demanded the same privilege as Finland. The Finns won't back down on their demand, and euro zone finance ministries are still haggling over what to do.Michael goes on to talk about bailouts that might work or bailouts that might not, overcomplicating a problem the Finns properly recognize as very simple.
The Greeks owe more than they can repay. The Greeks can't service their debts. They are both bankrupt and insolvent. Lending money to someone who is bankrupt and insolvent is stupid. The Finns aren't stupid. Right about now, I'll bet lots and lots of Finns are wondering why they chained themselves to this particular toad of an idea, the EU.