With Greece in a virtual state of default, European leaders are receiving new international pressure to shore up their finances and provide investors with a sense of security that the debt crisis will be contained. Next on the chopping block could be Portugal, France, Ireland, Belgium, and Italy if the European Union fails in this last stand. The gravity of the situation has seemingly put an end to the squabbling between European leaders as a plan has been agreed to in principle. Whether European leaders will be able to realistically implement this is a bit of an uncertainty at this point. The stakes can’t be higher though. If the markets reject their plan, borrowing costs will continue to rise for governments around the world that are already teetering on the brink of insolvency.
Most presume that the plan will provide a massive stimulus package which would drive down borrowing costs and restore confidence in the banking sector. With the world’s economic future hanging in the balance, markets certainly seem to want to believe in a credible plan. How credible could this plan be though? Is it even possible for Germany to find the will and wherewithal to bailout all of Europe? And even if they do, Europeans will be forced to accept the same austerity measures that they have been unwilling to accept in the past. All the while, protestors around the world are taking to the streets to tell those in power that they believe they are entitled to more, not less.
Perhaps this is just the inevitable conclusion of the democratic system. Throughout history philosophers have postulated that democracies will always be temporary in nature because the electorate eventually figures out that they can vote themselves more and more benefits, until the treasury is destitute. There is no question that socialized health care, unemployment, welfare, and public schools have put an almost unrecoverable strain on government finances around the world. Protestors around the world seem to believe that this is the result of a capitalist experiment gone wrong, but perhaps the experiment that has failed is that of democracy rather than capitalism.