Greece is the exception: EU can't bailout anyone else

Charlie Fell, prominent Economist sees Greece's failure as the first of many, via Charlie Fell:
The second phase of the financial upheaval that began during the autumn of 2007 is under way. History illustrates that banking crises are typically followed by sovereign debt crises and the current episode is proving no exception, with Greece being singled out as the weakest link among fiscally stretched developed nations.
We can see where this is going.  The EU via Angela Merkel's pocketbook has bailed out Greece for the time being.  But if financial crisis have a pattern, we will have more sovereign bailouts or even outright defaults.  What will happen when other EU countries follow suit?

The EU will be powerless.  If anyone does come in to save them it will be the IMF.   

There are two fault lines.  The first is the timeframe.  Greece has three years according to the Economist to get their budget in shape.  If they fail to do this, they still default on their loans.

The second fault line is what happens if other countries go through as similar crisis.  The EU simply will not have the money to pay for more bailouts.  Via the Economist:
...a Greek default now would carry a serious risk of triggering debt crises in Portugal, Spain and even Italy, the other euro-area countries suffering from some combination of big budget deficits, poor growth prospects and high debt burdens. The EU does not have the firepower to cope with these.
What this says to me is that regardless of the outcome of the Greek bailout, if other countries follow suit into fiscal oblivion, the EU does not have the capacity to handle a bailout. The economy of Italy, for example, is seven times the economy of Greece in GDP.  If Merkel nearly choked on Greece, just imagine trying to swallow a nut seven times larger.  Harvard Economist Kenneth Rogoff has already written off Europe coming to aid of any more countries, via Bloomberg:
“It’s more likely than not that we’ll need an IMF program in at least one more country in the euro area over the next two to three years,” Rogoff, a former IMF chief economist who has co-authored studies of financial and sovereign debt crises, said in a telephone interview. “The budget cuts needed in Europe in many countries are profound.”(emphasis mine)

The real question they should be asking is what happens when Japan defaults. The IMF will be powerless to craft a solution, and the only country that has the ability and inclination would be the United States.

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