WHAT a pickle. Caught between a Greek tragedy abroad and political purgatory at home, investors have shown themselves ready to flee the uncertainty they love to hate. The UK market alone saw £110bn wiped off the value of its shares last week – the seventh largest loss in a week since records began in 1984. Then on Monday, after the EU announced a staggering €750bn bailout, markets rallied sharply. But has the problem been solved, or just postponed?

One thing has really made me choke on my cornflakes. Under the aid plan, the European Commission will make €60bn available to support member states experiencing “difficulties caused by exceptional circumstances beyond their control,” said Spain’s finance minister, Elena Salgado.

Circumstances beyond their control? These countries have followed the Errol Flynn model – net income and gross habits – of living beyond their means. There are said to be six (yes, six) Greeks declaring taxable income of more than €1m a year. And yet here they are mortgaging all our futures. And it’s not even clear that the bailout is legal. The EU has dusted down the “exceptional circumstances” clause of Article 122 of the Lisbon Treaty. But it will be interesting to follow the case filed at Germany’s constitutional court by a group of professors, claiming that the bailout is illegal.

Meanwhile, it is especially alarming that Greece’s finances have gone beyond the point of no return even before its demographics become difficult. Birth rates are low, people are living longer and the post-World War Two “baby boomers” turn 65 next year. This will mean even more pressure on government finances. Western governments will react by printing more money and borrowing even more – assuming the bond markets let them. They will then be forced to inflate their way out of debt.

So: buy equities? In the long run, they should provide a better return than cash in an inflationary world.