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Why Europe Will Bail out Greece - Eventually

No doubt, what the Greeks put on the table in cost cutting and savings is - as ECB President Jean-Claude Trichet put it - "what was required", and there was a collective European sigh of relief that the first Greek bond auction under heavy fire landed well in the markets.

But ... has this done more than bought a little - albeit sorely needed and precious - time? Are we going to hobble from one bond auction to another now and not only for Greece, but for Portugal, Spain, Italy?

"It's not about money", Greek prime minister Georgios Papandreou insists as he heads out first to Berlin and then to Paris to drum up support for the latest austerity package Greece put on the table to drag his country out of the deep debt pit.

"We are not asking the German tax payers to foot the bill for our pensions or our holidays", a tired and embattled Papandreou told German daily Frankfurter Allgemeine Zeitung (FAZ). "What we want is the political support for our emergency measures from Berlin and the rest of Europe."

That's true enough. It never was only about money, even though money is undoubtedly at the heart of the problem.

It's about the European project, about this economic and monetary union that was meant to be the preamble to a political union, to a United States of Europe. A United States of Europe for which Europe clearly is not ready - not yet or maybe not ever.

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Macduff Everton | Ironica | Getty Images

The big question is, though, was Europe ready for the euro? Was it ready for a monetary union that bundled together a large group of economically far-from-homogenous countries and currency areas to shape the euro zone?

Credibility Issue

The first ten years have certainly been a much smoother ride for the euro and its countries than even Europhiles had dared predict. And even through the recent financial meltdown that shook global markets, the euro zone and its currency proved an anchor of stability.

So what brought about this Greek drama now? And why did it shake the euro to the core so quickly?

There are the fundamental economic reasons: heavy overspending in the fat years and no money to spare in the (now) meager years. Plus an unhealthy dose of ... let's just call it creative accounting.

The plain living beyond their means is something the Greeks share with many other countries - inside the euro zone or out (the US and the UK clearly suffered and are suffering from the same problem).

No, what brought on the Greek - and more to the point the euro - drama was credibility. A currency as young as the euro has to prove its credibility and its reliability almost every day.

It's just something we tend to forget in times of calm sailing, even more so because the euro has been such an incredible success story. Who would have expected this currency without a history and with few real friends (at least before its birth) to become world reserve currency number two within the span of a decade?

So here we are again now. There is a crisis - certainly in Greece and maybe the threat of a debt crisis looming on Portugal, Spain and others.

How European is Europe?

But it is not something we haven't seen before, is it? We even got through something called the "Poland crisis" in the eighties, when Poland, then a member of the communist bloc, was going through a severe recession combined with high inflation and a staggering foreign debt burden.

Ok, ok, without a single European currency. But did that really make any difference? Only to currency markets.

For Europe and its governments, it still meant they had to come to the rescue and prevent a European country from defaulting (and that was still in the days of Soviet bloc and iron curtain!)

Now the euro zone has a common currency and monetary policy, but that has only changed the accounting and the denominations in the bond markets for this particular problem.

No matter what German politicians might be tempted to spout in a populist manner to the yellow press at home (like German economics minister Reiner Bruederle stating brazenly "no single German cent for Greece!"), in the end it will always boil down to this: Europe, the EU can not and will not permit any European country to default. Period. Inside the euro zone or out. Better believe it.

The rest is logistics and fine print. Bailout, soft loans, setting up a European Monetary Fund ... some kind of safety net will be put in place. Why? Because there is no choice. Simple.

So when Greek PM Papandreou insists that "this is not about money" he is right. It's about Europe.

But then again, Europe is always about money too. And about who ultimately pays for what. Or not. Because German politicians in the end still have to win German elections. We are a far, far way away from becoming true Europeans.