On Thu, 3 Sep 2015 03:55:31 PM Anders Holmström wrote:
What they're mainly doing is forcing them to implement the reforms they agreed to in the previous two MoAs, but never carried out. "Austerity" in Greece today means "living within your means". The only alternative to austerity is to keep borrowing, but no-one will lend to Greece so austerity is inevitable; it's not "inflicted" by anyone.
Successive Greek governments cooked the books to get into the Euro, then kept cooking to borrow at unsustainable levels. The "Troika" have certainly made blunders but they didn't cause the crisis; Greece did that all by itself.
There are bankruptcy laws to protect individuals and corporations that borrow more than they can repay. If it gets to the stage where a country can't be effectively run while repaying debts then there should be similar bankruptcy protections in international agreements. When banks lend money to individuals and corporations they know about the possibility of bankruptcy and do appropriate investigations to ensure that the probability of default is low. If they were forced to perform the same investigations on countries then perhaps Greece wouldn't have been permitted to borrow so much money and there would have been a smaller crisis years ago instead of a big one now. Also there's the concept of odious debt. If banks lent money that they knew to be for corrupt purposes (IE not benefiting the citizens of the country) then they should not have a right to claim repayment from the citizens (IE general revenue of the country) but instead from the corrupt people who received benefit from the money.
The private banks took a 50% haircut (a huge debt forgiveness) and the balance of the debt was taken over by the EU (& IMF to a lesser extent) at incredibly generous rates and with maturity pushed out decades (also in effect a debt forgiveness).
How nice for the banks that they could lend money to a country that is unable to repay them and then the EU stepped in to guarantee the loans. It saved them from the effort of determining whether the loans could be serviced and ensured that the bankers got their bonuses. A better resolution would be to cancel the debts, sack the bankers who authorised the loans, and then have the banks (or the banks' creditors) sue the ex-bankers for the lost money. -- My Main Blog http://etbe.coker.com.au/ My Documents Blog http://doc.coker.com.au/