And have been for decades. You Brits and your reliving of past glories. Is there anyone on this site who was even born before 1945?

Given the probable inability of those countries to service the debt and the associated default risk, Germany could just cut out the pretense of "loans" and pay off their debt. Except that would be political suicide for Merkel.

Nobody is going to give Greece & co. the money without a huge degree of control over those countries. I wouldn't trust Greece, whose cooking of the national books led to this mess, with a large sum on money. If the only chance of seeing that money repaid rested on that same government implementing a series of difficult and unpopular reforms and austerity measures, my reluctance would deepen.

I completely agree that their debt would be more manageable with lower interest rates, and the risk of default would drop. IIRC, hitting 9% interest rates on bonds was what drove Portugal over the edge, so the vultures circling the area are not helping the situation. However, I wouldn't even lend my own money to those countries - even a 25% interest rate is meaningless if they default.

My understanding is that it's already in the works with the creation of a special bank funded with German bonds which would only exist to service the debt from the PIGS.  It'll exist outside the EU framework and since it's German funded by a German institution though technically it would not be part of the German government.  Sort of like a European Frannie Mae, but instead of buying mortgages it will buy PIGS bonds. 




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Technician - "We can't even get decent physical health care. Mental health is like witchcraft here."

Which is why the EU has been working on it for the past 30 years.

I say this as a compliment, EU politicians understand that Europe only has a future in world affairs as a unity, Germany, France or the UK will have little or no influence at all on their own (the Euro has credibility only because, not in spite of current EU political ties).