By the way, these "pools" that are being created in Europe (e.g. the EFSF) are nothing more than a way to shift NEW debt off the balance sheet of heavily indebted countries into a different vehicle. I thought they were all outraged that Greece did this?
The only way it would work is if you had countries like Australia and China - i.e. those with low debt and who can themselves borrow at very low rates or who have lots of spare cash, who thereby raise the creditworthiness (and hence stability) of the ESFS itself.
Hence why the IMF comes with cap in hand to Australia.
Like the Germans though, I don't necessarily want to throw good money after bad. Despite some reforms during the last few years, much of Europe still has an unrealistic welfare system that drains the state of money. Why prop up a system that is doomed to repeat the same mistakes. The Europeans are trying everything they can to preserve their wacky welfare systems by borrowing yet more funds.
Here's an idea. Take some tough love. Take on the unions and introduce flexible working/employment practices as well as flexible working hours. Cut pensions/raise pension ages further. Create further incentives for capital to find its way into innovative investments. Get more people working by lowering welfare payments (in many countries here you get paid more on welfare than you do in a lot of jobs - great incentive to work hey), encouraging or making it compulsory for long term unemployed to undertake training/social work. Get students studying more relevant degrees/vocations.
There's no substitute for hard work and sacrifice to turn a bad economic situation into a booming economy.
In fact apart from Germany and a few other countries - have many countries in Europe ever had to go through an industrious period where the whole population worked hard, studied hard etc to make a prosperous future together (e.g. like South Korea, Japan and now China)? So many slackers in many countries there who are still living off the "old money" obtained from all the raids of the America's, Africa and Asia during the colonial period.
The market seems to have already priced in default from several European countries now anyway. Let Greece default I say. Nothing better to jolt them back to reality than being frozen out of debt markets and having to balance their books (ie. they are still running huge deficits) overnight.
If I were the Aussie Govt the only way I would put in funds is if Europe gave us security - the Greek Islands will do, maybe even Ireland given most of them want to come here anyway. We can then look at least look forward to taking a holiday in Australia's 7th state once the game of kicking the can down the road finally comes to an end.
