Can Greece be saved?

European leaders said they would bail Greece out again, provided the Greek parliament approves a painful new set of austerity measures.

Desperate to prevent a default that could throw the global economy into crisis, European leaders this week signaled they would bail Greece out again. But the estimated $64 billion rescue fund, following last year’s $160 billion, will flow only if the Greek parliament approves by next week a painful new catalog of austerity measures, including tax hikes, social spending cuts, and privatization of national industries. The parliament may balk, what with thousands of Greeks outside the building chanting, “Thieves! Thieves!” Many analysts fear a default could hit global credit and debt markets as hard as the 2008 collapse of Lehman Brothers did.

There’s great danger here for the U.S., said The Washington Post in an editorial. Our economy is “too weak to risk a Lehman-like shock,” and a Greek default would drive up the dollar, costing us exports and jobs. Yet there’s little the U.S. can do about Greece; we are “at the mercy of European politics.” That’s why the Obama administration “is prodding the Europeans to deal with the Greek problem swiftly, even if it means slapping on yet another band-aid.”

Hiding the wound will only give it “a chance to get worse,” said Newsday. Greece made this mess by “lying about its deficits” in order to join the euro club, and then using that currency “to underwrite a dysfunctional society in which corruption and tax evasion are rampant.” Nearly a third of Greeks work for the state and retire early with generous pensions. “The best of the bad choices” for Europe is to acknowledge that Greece is bankrupt and “keep the crisis from spreading.” To do that, said The Wall Street Journal, Europe should start working now to “reward better policies” so vulnerable debtors like Ireland and Portugal live within their means and don’t become the next Greece. “Greece can’t avoid a default, and its people can’t avoid a painful reckoning.” The question now is whether others can “learn from its painful lesson soon enough to avoid a similar fate.”

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