EU Socialists suggest euro zone rescue fund

Source: Reuters UK

European Socialists proposed on Tuesday setting up an emergency fund to prevent defaults by euro zone countries such as Greece that run into trouble, but there is scant EU appetite for radical institutional reforms. The fund would be part of the European Investment Bank (EIB), the European Union's government-owned financing arm which issues bonds to secure cash for projects such as energy or motorway construction, the Socialists said.

Diplomats say Greece might be offered a one-off bail-out scheme, but far-reaching, systemic reforms, such as setting up a "European Monetary Fund" or creating an economic government for the euro zone or the EU, are unlikely.

Still, the Socialists insisted on a permanent mechanism to help countries in trouble to complement the repeatedly breached EU budget discipline rules that set the deficit ceiling at 3 percent of gross domestic product.

"The current crisis has revealed the lack of a solidarity mechanism in the EU," said Poul Nyrup Rasmussen, a former Danish prime minister who is head of the Party of European Socialists, an umbrella for left-wing parties. The group's statement said the fund would stop a "locust swarm of speculators moving from country to country".

Read more: http://www.reuters.com/article/idUSLDE62111Q20100302?type=marketsNews

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Kudos to European Socialists who are trying to come up with a long term method of helping with EU countries that get into financial trouble instead of lurching from crisis to crisis as seems to be the alternative.

This "crisis" is the perfect vehicle to the reactionaries to force austerity on the poor and middle class around the world.

The governments they own have no desire to try programs that would alleviate the economic crisis while keeping the poor and middle class intact.

In fact if this crisis hadnt happened "by accident" they would have manufactured it so they could accomplish their goals.