This is a tragedy waiting to happen. You are being warned.
If a private firm was doing this, there would be panic inside that firm, and investors would be bailing out of its equity. Underwriters and investment banks earn their keep, in large, by making sure that this almost never happens.
By contrast, the EFSF — which is only 18 months old, and was created in response to the previous cycle of predatory borrowing in Europe — is an organization that is supposed to prevent this happening for whole countries.
This is analogous to:
- Having a friend with an addiction problem,
- Getting a group of friends together to help your addicted friend out,
- And being so codependent yourselves, that no one will help you,
- And then having covered your a**es so well in the first place, that it isn’t news to most people that you’re in trouble too.
Talk about rationalization crossing over from neurosis to psychosis.