
Greek coat of arms. Image via Wikipedia
At lunch today with some friends, I expressed the view that if the Greeks were really smart, they would refuse the co-called “bail out,”, depart from the European Union, and flat out default on their debt. The debt is primarily held by banks in Germany, and to a lesser extent in France. Why would this be the best approach? Because it would stiff the lenders who made idiotic (or worse) decisions to lend to an uncreditworthy country. Why should the Greek citizens suffer through a very prolonged painful period of austerity to benifit richer countries who knowingly took obvious risks?
Now, Barry Ritholtz expresses a similar view:
… the Greeks are not so different than you or I. We Americans socialized the losses of our banks, while being so dumb as to leave the profits privatized. (The worst of both worlds!). Or the Irish, for that matter, who like us and the Greeks, were foolish enough to assume the bad debts of their reckless bankers.
Whenever you hear a Bailout being discussed, look to see who it is that is actually being bailed out. It is not the Greek people or even the Greek government — rather, it is the creditors of Greece. These are the banks mostly in Europe, primarily in Germany and France, but also includes Japan, China and the US.
Thus, it is no surprise that Greek people are rioting and the banks are rallying. They are the beneficiaries of the Greek austerity, of the EU’s largesse, of the various rescue.
Greece has all sorts of problems, from their tax base to their economy. But the Greek people can tell when they are being raped and pillaged . The media may not get it, but the ones who seem to know the score are the rioters in the streets of Athens, Thessaloniki and Syntagma Square.
Check this out:
“Chancellor Merkel said today that this was really a very good piece of news [that the Greek parliament had voted for massive new austerity cuts]. And of course the German government continues to focus on trying to avoid a Greek default,” he told RT. “They see that as the main danger here. Chancellor Merkel said that if the Greeks were to default on [their] debt, that would throw the whole eurozone into chaos, and it would unleash a crisis worse than the collapse of Lehman Brothers.”
Of course this is “good news” … for German banks.
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