Should Greece be left to go bust?

GIVING its broad backing to Greece's latest austerity package on Wednesday February 3rd, the European Commission nevertheless said the country's government must do more to restore its finances, including further cuts in the public-sector pay bill. Although sounding tough in public, the EU's leaders have decided privately that they will have no choice but to bail out Greece if it proves unable to keep funding itself through the bond markets.

Their main worry is that if Greece fell into bankruptcy, contagion would spread to other indebted members of the euro such as Portugal, Spain and Italy, triggering a far larger crisis. Among those urging the EU to offer aid to Greece is Joseph Stiglitz, a Nobel economics laureate, who argued in an interview published by Bloomberg News on Wednesday that a public offer of assistance was needed to scare off the “speculators” now attacking the euro.