George Will: Socializing of Greece's folly makes Europe "the world's leading producer of a toxic product - moral hazard"

When Chancellor Angela Merkel decided that Germany would pay part of Greece's bills, voters punished her party in elections in Germany's most populous state, North Rhine-Westphalia. How appropriate.

The 1648 Peace of Westphalia, which ended the Thirty Years' War, ratified Europe's emerging system of nation-states. Since the end of the Thirty-One Years' War (1914-1945), European elites have worked at neutering Europe's nationalities. Greece's debt crisis reveals this project's intractable contradictions, and the fragility of Western Europe's postwar social model -- omniprovident welfare states lacking limiting principles.

Greece represents a perverse aspiration -- a society with (in the words of Wisconsin Republican Rep. Paul Ryan) "more takers than makers," more people taking benefits from government than there are people making goods and services that produce the social surplus that funds government. By socializing the consequences of Greece's misgovernment, Europe has become the world's leading producer of a toxic product -- moral hazard. The dishonesty and indiscipline of a nation with 2.6 percent of the eurozone's economic product have moved nations with the other 97.4 percent -- and the United States and the International Monetary Fund -- to say, essentially: The consequences of such vices cannot be quarantined, so we are all hostages to one another and hence no nation will be allowed to sink beneath the weight of its recklessness.

Recklessness will proliferate.

U.S. has risked at least $50 billion on Greece bailout; no one knows the maximum for sure; everyone is sure the money won't be tapped

The US exposure to the European debt bailout could be at least $50 billion, but the chance of taxpayers actually being on the hook for that appears remote.

Determining the exact amount of exposure is nearly impossible until governments start stepping up to the window created by the European Union and the International Monetary Fund to stem the crisis in Greece and elsewhere on the continent.

But one rule-of-thumb formula puts potential US exposure at $54 billion should the entire IMF loan fund be tapped.

And that doesn't count the added exposure created by the Federal Reserve's decision over the weekend to participate in currency swaps to provide liquidity to jittery European banks. The swaps move resembles the Term Auction Facility the Fed instituted when the worst of the US financial crisis hit in 2007-08.

And the entire bailout package has been nicknamed "Le Tarp" by some for its similarity to the Troubled Asset Relief Program that bailed out US companies with taxpayer-backed loans.

US involvement in the European crisis already has drawn critics from Congress and economists who think the domestic financial issues should be cleared up first.

"Inflation and debt is not the answer to a problem caused by inflation and debt," said Michael Pento, chief economist at Delta Global Advisors and a critic of both the European plan and the Fed's approach to US fiscal stability. "It's a European problem that should have been dealt with by Europeans."

In Washington, senior administration officials said taxpayers will not be liable for the European bailout.