Should The European Union Bail Out Its Member Countries?

Last updated: July 30, 2017

Since the end of 2009 when fears about Greece’s economy mounted and its debt was downgraded, the European Union (E.U.) has faced a big challenge: deciding whether or not it should bail out member countries. Three countries Ireland, Portugal, and Greece, have so far received or are in the process of receiving bailouts. Greece is looking to get a second as it increasingly becomes obvious it wont be able to quickly go back to the capital markets. Some E.U. ministers feel that it is necessary to bail member countries out of crippling debt to "save" the E.U.'s economy, while other E.U. ministers feel that each member country should be responsible for its own debt and not pull other member countries into more economic trouble. Bailouts don’t seem to be working. Once one country gets a bailout, the markets begin looking for the next likely candidate creating a line of dominoes. Yet the alternatives are not good options either; letting countries either drop out of the Euro or default on their debt, or else much closer integration.

Should The European Union Bail Out Its Member Countries?
Yes because...

Domineo Effect

If Greece, Portugal, Spain, or Ireland default on their government bonds, then it would cause a dominoe effect to sweep across the European Union. Investors would not invest in government bonds of European Union countries with debt, including Britain, France, Germany, and Italy, and thus, these countries who are deemed to be somewhat economic safe would become bankrupt.

Since markets are global, the European debt crisis does not only effect Europe either. The European debt crisis would effect the U.S., a world economic superpower, negatively, because American banks lent Europe $1.5 trillion and Europe buys 1/4 of all American exports [[]].

Not all bailouts are failures. In the early 1990s, Sweden successfully solved its banking crisis by bailing out its banks [[]].
No because...
The experiment of a common currency has failed. The gulf of economic divergence between member states is irreconcilable - eg. Germany V Greece. Bail outs are only 'kicking the can down the road'. The chickens born from all the eggs in the one globalisation basket are coming home to roost. The bond holders need to face up to the risks they took - let the chips fall where they may now so that a real recovery can begin.

Should The European Union Bail Out Its Member Countries?
No because...

It should let them leave the Euro

It was the Euro that has caused these smaller economies to collapse because they can't keep up, and seeing as the illegal bailouts come with surrender of a countries economic control it is only fair that they are allowed back to a non-political currency that works because the Euro is doomed, they are now trying to buy up their own debt.
Yes because...
if they do not then we will see widespread unemployment sweep through these countries (i.e. Greece, Ireland, Portugal and now Spain). This would lead to political instability and riots which could spread into the other European Nations. Also this bailouts have not coe without certain precautions put into place. For example Greece had to promise many economic reforsm especially in their banking system to model it after strong economies such as the Sweden, Norway, and Germany. In addition they must also follow through on a payment plan that would allow them to back all the money borrowed for this bailout by 2016 so using this bailout would not have any future repercussions. In fact not doing the bailouit would weaken and perhaps cause the collapse of the European Union in the coming years.

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