Greece is in big troubles. Its economy is in bad shape, its debt is massive and its future is quite bleak. Interestingly, other European nations do not seem very eager to come to its rescue. The 27-country EU block, led by Germany and France, have promised some support package for the country but it comes with strings attached and a lecture on how Greece must get its act together by slashing public sector wages and other spending.

Yet, instead of being grateful, Greece’s prime minister, George Papandreou, is mad as hell. First, he refuses to be treated like a lab animal (hey, I am watching to see what a country’s collapse looks like). Second, it’s not its fault. According to him, it’s the fault of the European Commission “for failing to crack down on the previous conservative government’s “criminal record” in falsifying statistics.”

Remind me, where have I heard that the previous administration is exclusively to blame for the sad fiscal outlook of a country?

What would happen if the EU failed to extend a bailout package to Greece and if the country went bankrupt? There isn’t any doubt that, if Greece defaults it be painful and it would have very ugly consequences for the people who invested in that country. Not to mention the consequences this fall would have on Spain, Portugal and Italy.

However, I agree with Cato Institute’s Dan Michell when he argues that no matter what the cost of defaults would be, there would be even more painful long-term consequences for bailing Greece out. He gives four good arguments:

1. Bailing out Greece will reward over-spending politicians and make future fiscal crises more likely.

2. Bailing out Greece will reward greedy and short-sighted interest groups, particularly overpaid government workers.

3. Bailing out Greece will encourage profligacy in Spain, Italy, and other nations.

4. Bailing out Greece is not necessary to save the euro.

Read the whole analysis here.

For these reasons, I am also against bailouts for state governments, the automotive or the financial industries and other interest groups that Washington is always on route to bail out.