Why Germany and France must bail out Greece

It is very important to bail out Greece as opposed to allowing the country to default on its debt. Very few economists believe that allowing Greece to default would be beneficial. The biggest reason as to why they must bail out Greece is the bonds that Germany and France own. If Greece was to default on its debt French and German banks would need a bailout because of the massive losses that would occur. Allowing Greece to default would also cause devaluation of the Euro which would be detrimental to the whole European Union. The IMF will give Greece $15 billion while Germany and France will aid an additional $30 Billion all at 5% fixed interest rate. Economists believe this is enough money to aid Greece in restructuring there debt and repaying some of their old debt.

I personally feel that bailing out Greece is incredibly necessary. If the European Union let Greece default on its debt the impact would cause Ireland and Spain to do the same. Both Ireland and Spain are on the verge of being as overextended as Greece is currently.

News article from The Economist:
http://www.economist.com/world/europe/displayStory.cfm?story_id=15980711&source=features_box_main