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The blame here, like the GFC, has to lie with the lenders, who are sophisticated investors making very large profits from loans to unsophisticated or (politica
by lancewiggs 11y ago
The blame here, like the GFC, has to lie with the lenders, who are sophisticated investors making very large profits from loans to unsophisticated or (politically) pressured borrowers. The lenders in this case assumed the loans have sovereign risk, but countries have risk too and judgement day has come.
Take your licks, write down the loans so they are repayable and move on. If not then this will likely become a far bigger problem for the world, and the lending institutions.
- chernevik 11y agoThe lenders presumed that Greek debt would always be acceptable to the ECB as collateral, and thus would always be worth face value. This analysis of ECB collateral policy proved correct. The blame, then, lays in the policies and signals of the ECB, which were transparently dictated by the political urgency of keeping Greece in the Euro. Had the Eurozone and the ECB adhered strictly to their budget rules, and penalized departures through ECB collateral policy, we'd be in a very different place. Of course, had those players had used proper accounting and figures, Greece would never have been qualified for the euro in the first place.