Europe's Bailouts Aren't Working

First there was Greece. Then Ireland. And now it looks like Portugal and Spain are next. “Let’s just be blunt: The Eurozone bailout program has failed,” writes Michael Schuman in Time. Europe has so far hoped that throwing money at troubled countries and ordering them to cut their budgets will reassure investors. It hasn’t. Realizing that such budget cuts could undercut economic growth, the markets are still treating Portuguese and Spanish bonds like a hot potatoes.

“Once fear grips the minds of investors, they behave in ways that make those fears reality,” Schuman explains. To counteract that, Europe needs to be more proactive. Instead of “waiting until the edge of the abyss to step in,” it should enact bailouts now, and tie them to reform programs that will improve both growth and fiscal stability. They also have to enact some Eurozone-wide changes. “Countries like Germany and France can’t just put up some cash for a bailout and go about their business.” (More Ireland bailout stories.)