It can be done

Greece was small and thus easy to bail out despite the fury of German voters, but what happens if one of the large southern banana republics such as Spain defaults. The only solution would be for the European Central Bank to step forward as a buyer of last resort for all Club Med bonds. Of course the ECB is prohibited from doing so by the Maastricht Treaty but EC laws are not meant to be taken seriously and can easily be circumvented. However, Latvian Premier Val Dombrovskis, who transformed a deficit of 20% of GDP into a surplus of 8%, remarked, “Real reform only starts when government money stops.” He achieved the turn round by cutting 30% of public sector jobs and reducing the wages of remaining public sector workers by 25% thus setting a new standard.

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