The proper way to bail out a Euro member would be to amend the Treaty to allow a formal system of loans and grants to Euro members who get into trouble. The Treaty could provide for suitable controls over the member state’s conduct in return for seeking and being granted aid. I would favour that approach, as I think the Euro area needs a better system of transfers.
As a non Euro member it would give the UK a good opportunity to bow out of more of the needless EU government that we do not want, and would give us the opportunity to have a refererendum on the Treaty as modified. Clearly the UK should not be party to the bails outs or the rules imposed on Euro members. The EU would doubtless need to give us substantial powers back to make a new Treaty palatable to the UK public.
A single currency scheme either needs a single government which can make the calls on how much to borrow, how much to print, and how much to spend, or it needs a set of rules over how much each of the individual memebrs can spend, borrow and print. If I were a German taxpayer I would not wish to bail out Greece. I would not be satisfied they have done enough to cut their spending. I would be worried in case Portugal, Spain and others were in the queue for my support as well.
Why do these governments whinge and whine so much about the need to reduce their costs? Business accepts that in recessionary times you may need to cut costs by 10% or 20% to survive. You just get on and do it. You don’t do it by threatening your customers with a worse service, or by cutting back your front line service or best product offerings. You do it by working smarter and cheaper.
These EU governments – and the UK – have failed to make themselves efficient and to discipline their costs for years. That should make it easy to cut the costs of doing what they need to do. They should be told to get on with it, instead of seeking new ways to milk the taxpayer. Borrowing more is just delayed tax.