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Honestly a lot of this should be on Greece. They racked up huge debts while losing their competitiveness in the global market. This led to slower growth. Add i

Honestly a lot of this should be on Greece. They racked up huge debts while losing their competitiveness in the global market. This led to slower growth. Add in attempts to hide how much they were really in debt and you have a recipe for disaster. This was compounded by the fact that since they relied on the Euro, they couldn't just print their way out this situation like the US does all the time. Instead, they got caught with their pants down and had no alternative but to own up and take severe measures to right the ship.

keithpeter 10y ago
For every borrower, there is a lender. Was it not the case that banks in Northern Europe saw an opportunity (common currency, diverse interest rates, and countries with historically very low personal borrowing) and went for it?
the-dude 10y ago
Germany and France were quite happy to take Greeks money for VWs, BMWs etc.
crdoconnor 10y ago
"Honestly a lot of this should be on Greece. They racked up huge debts while losing their competitiveness in the global market. This led to slower growth. Add in attempts to hide how much they were really in debt and you have a recipe for disaster." The Eurozone was fully aware of, and indeed, tacitly endorsed the trick Greece played with Goldman Sachs in order to join the Eurozone. It was on the front page of the Times at the time when it happened. The Greek leaders behind this are gone (but not punished). The Eurozone leaders behind this are still in power. The weak and powerless in Greece are being punished for their crimes. Many people think this is justice.
abakker 10y ago
It seems reasonable to me that the major burden fall on the lenders. After all, they are the ones tasked with due diligence, credit rating, etc. I can ask my bank for a $100million loan. If they judge me worth of that, and then I fail to pay, yes, it is my fault for losing the money, but their fault for misjudging the risk. The lender has the majority of the power in the relationship until the loan is given, so it is in their court to make sure that they do their research. It appears that the crux of this article is that the IMF didn't do the research, or did it wrong, and badly misjudged many risks and solutions. The IMF had reasonably good information about the situation in Greece, and still didn't see the warning signs.
- ethbro 10y ago
  Or to put it another way, if you feel the majority of the blame falls on Greece, I'm happy to loan any person in the world a large sum... Provided I'm given the right to direct their, their children's, and their children's children's labor towards repaying me. And how is bending a government towards repayment at all costs different than enslavement of its citizens? Except in this case the master happened to be incompetent enough that they made their own repayment less likely.
  - wmil 10y ago
    Fundamentally the problem with Greece is that the IMF & EU are focussed on saving the Euro. Meanwhile Greece is unable and / or unwilling to meet it's Eurozone obligations. The only real solution it to toss Greece out, but negotiate a smooth transition to a new drachma. Convert all existing debt to drachmas. Greece can deal with the outstanding debt by devaluing their currency. However they'll have to choose between letting pensions see their purchasing power decline, or finally cracking down on tax cheats. But people have a strange moral attachment to the EU / Euro. So it won't happen.
    - ethbro 10y ago
      > Convert all existing debt Would that include the debt from northern European banks already offloaded onto them? Because that seems like an equally terrible deal. "We're going to bail you out with a loan, the balance goes to your creditors, you're responsible for repayment, and everyone is pissed at you because we told them we were giving you cash."
georgeecollins 10y ago
Respectfully disagree: An important reason why they lost competitiveness is that they shared a currency with Germany, which worked well for Germany in terms of trade. You can make the moral arguments like "they shouldn't have.." but the truth is they are an institution not an individual. They should suffer for taking loans, but so should the institutions that offered them that new better.

keithpeter 10y ago

For every borrower, there is a lender. Was it not the case that banks in Northern Europe saw an opportunity (common currency, diverse interest rates, and countries with historically very low personal borrowing) and went for it?

the-dude 10y ago

Germany and France were quite happy to take Greeks money for VWs, BMWs etc.

crdoconnor 10y ago

"Honestly a lot of this should be on Greece. They racked up huge debts while losing their competitiveness in the global market. This led to slower growth. Add in attempts to hide how much they were really in debt and you have a recipe for disaster." The Eurozone was fully aware of, and indeed, tacitly endorsed the trick Greece played with Goldman Sachs in order to join the Eurozone. It was on the front page of the Times at the time when it happened. The Greek leaders behind this are gone (but not punished). The Eurozone leaders behind this are still in power. The weak and powerless in Greece are being punished for their crimes. Many people think this is justice.

abakker 10y ago

It seems reasonable to me that the major burden fall on the lenders. After all, they are the ones tasked with due diligence, credit rating, etc. I can ask my bank for a $100million loan. If they judge me worth of that, and then I fail to pay, yes, it is my fault for losing the money, but their fault for misjudging the risk. The lender has the majority of the power in the relationship until the loan is given, so it is in their court to make sure that they do their research. It appears that the crux of this article is that the IMF didn't do the research, or did it wrong, and badly misjudged many risks and solutions. The IMF had reasonably good information about the situation in Greece, and still didn't see the warning signs.

ethbro 10y ago
Or to put it another way, if you feel the majority of the blame falls on Greece, I'm happy to loan any person in the world a large sum... Provided I'm given the right to direct their, their children's, and their children's children's labor towards repaying me. And how is bending a government towards repayment at all costs different than enslavement of its citizens? Except in this case the master happened to be incompetent enough that they made their own repayment less likely.
- wmil 10y ago
  Fundamentally the problem with Greece is that the IMF & EU are focussed on saving the Euro. Meanwhile Greece is unable and / or unwilling to meet it's Eurozone obligations. The only real solution it to toss Greece out, but negotiate a smooth transition to a new drachma. Convert all existing debt to drachmas. Greece can deal with the outstanding debt by devaluing their currency. However they'll have to choose between letting pensions see their purchasing power decline, or finally cracking down on tax cheats. But people have a strange moral attachment to the EU / Euro. So it won't happen.
  - ethbro 10y ago
    > Convert all existing debt Would that include the debt from northern European banks already offloaded onto them? Because that seems like an equally terrible deal. "We're going to bail you out with a loan, the balance goes to your creditors, you're responsible for repayment, and everyone is pissed at you because we told them we were giving you cash."

georgeecollins 10y ago

Respectfully disagree: An important reason why they lost competitiveness is that they shared a currency with Germany, which worked well for Germany in terms of trade. You can make the moral arguments like "they shouldn't have.." but the truth is they are an institution not an individual. They should suffer for taking loans, but so should the institutions that offered them that new better.