By extending loans to Greece and Ireland all the EMU and IMF are doing is kicking the can down the road. They are not getting rid of debt, only helping roll out the maturities and adding to the total level of indebtedness. Ireland and Greece will now have even more debt that they cannot afford to service.

Greece will have debt at 150% of GDP in a couple of years by the most generous projections. If one assumes that Greece's interest costs are 5%, they will need to pay 7.5% of GDP a year just to service debt. There is not a chance that is going to happen. But it does look like the bailout machine has succeeded in saving the day for now.

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