Hot on the heels of my post yesterday where it was reported that the IMF is refusing to release the last payment to Greece because there is no guarantee they can make good on its current debt next year, news comes from Brussels that the EU is "racing" to put together yet another bailout package.

This one is for 65 billion Euros on top of the 110 billion already spent by the Greeks. Reuters:

Greece took a 110 billion euros ($158 billion) rescue package from the EU and IMF last May but has since fallen short of its deficit reduction commitments, raising the risk of a default on its 327 billion euro debt -- equivalent to 150 percent of its economic output.

The tax cuts sought by conservative New Democracy leader Antonis Samaras could aggravate the revenue shortfall, but he argues they are essential to revive economic growth.

EU officials said a new 65 billion euro package could involve a mixture of collateralized loans from the EU and IMF, and additional revenue measures, with unprecedented intrusive external supervision of Greece's privatisation program. "It would require collateral for new loans and EU technical assistance -- EU involvement in the privatisation process," one senior EU official said, speaking on condition of anonymity.

Extra funding for Greece faces fierce political resistance from fiscal conservatives and nationalists in key north European creditor countries -- Germany, the Netherlands and Finland -- complicating EU governments' task.

Greek daily Kathimerini said finance ministers of the 17-nation single currency area may hold a special meeting next Monday on a new package. European Commission spokesman Amadeu Altafaj dismissed the report as "unfounded rumours, once again."

How long can they keep up this charade, pretending that Greece is serious about reducing its 327 billion Euro debt? As long as they can. It has been feared that a Greek default would start a domino effect with Portugal, Ireland, and perhaps even Spain going down too. That doesn't seem to be an immediate threat - not with the EU central banks willing to go so far out on a limb and continue to pour good money after bad into the Greek economy. But no nation seems willing to do what is necessary to save itself, and no nation appears ready to allow the EU to violate their sovereignty by telling them what to do about their economy.

If this crisis peaks in 2012, it may affect the presidential election in a tangential way. A weaker Euro means less buying power for Europeans and probably higher interest rates as well. That will slow their imports from America and could even lead to higher interest rates here. Bad news for Obama - and the American economy.