If what you said is true, then NOW is the perfect time for the EU to kick Greece out- they can blame it all on Greece and try to save the rest of the system.
However, you probably have two sets of policymakers within the EU arguing between themselves about which course to take. The “realistic” socialists (relatively speaking realistic they are still socialists after all) who realize that if they don’t cut Greece loose then the whole system will collapse, vs. the “pure” socialists who will not admit any failure no matter what.
An interesting question is which policy would be better for Europe long term. A quick collapse of the Eurozone by keeping Greece and bailouts going for now might be better than a slower decline by trimming out the PIGS countries one at a time.
I also would not be so confident that Portugal, Italy, Spain would actually “learn” the lesson of a devastated Greece.
What one should keep an eye on is what Germany will decide to do if the EU does continue to bail out Greece and the others. The EU can live without Greece (in fact it would be healthier), but without Germany it all collapses rapidly.
“If what you said is true, then NOW is the perfect time for the EU to kick Greece out- they can blame it all on Greece and try to save the rest of the system.”
No, you cannot ‘kick’ them out. You need to let them choose their path. Live up to their obligations or leave. If they kick them out, the left will always blame the EU for the consequences.
“However, you probably have two sets of policymakers within the EU arguing between themselves about which course to take. The “realistic” socialists (relatively speaking realistic they are still socialists after all) who realize that if they don’t cut Greece loose then the whole system will collapse, vs. the “pure” socialists who will not admit any failure no matter what.”
One way of looking at it but I think it more like the policy makers will divide between those who think the EU must be preserved at all costs and those who do not.
“An interesting question is which policy would be better for Europe long term. A quick collapse of the Eurozone by keeping Greece and bailouts going for now might be better than a slower decline by trimming out the PIGS countries one at a time.”
If I’m correct, the consequences to Greece will convince PIS that they need to avoid leaving the EU at all costs.
I also would not be so confident that Portugal, Italy, “Spain would actually “learn” the lesson of a devastated Greece.”
The more catastrophic it is to Greece the higher the chances of learning taking place.
“What one should keep an eye on is what Germany will decide to do if the EU does continue to bail out Greece and the others. The EU can live without Greece (in fact it would be healthier), but without Germany it all collapses rapidly.”
Ah, that is the issue. The EU has always been about controlling Germany.
The PIGS claim that all this is Germany’s fault. Germans worked too hard and were too successful. Germany made too many goodies and sold those goodies to the pigs. Germany took the money from these sales and loaned it to the PIGS to finance more purchases. German benefited so much from all that hard work that it is the Germans who owe the PIGS, not the PIGS owing Germany. If Germany had been more lazy and not made so much money producing so many goodies for so many PIGS to buy this situation wouldn’t exist.