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> All the while, there is absolute ZERO condemnation for banking entities making risky loans. There is not even a tacit nod towards acknowledging that if banks

by Lazare 11y ago

> All the while, there is absolute ZERO condemnation for banking entities making risky loans. There is not even a tacit nod towards acknowledging that if banks make loans that fail, it is their loss to eat. Not sure you really understand the situation. Everything which you said "isn't happening" already happened. There was already a massive haircut on privately held Greek debt (but not the publicly held greek debt), and the banks already ate a huge loss. Something like 80% of Greek debt is now owed to the "troika", with much of the remainder held domestically. The reason that EU governments focus on debt repayment, and why people talk about taxpayers is because they own the debt, and it's their taxpayers who will eat the loss. > Not a whisper about how taxpayers have been surreptitiously bailing out banks, and not Greece. Probably because that didn't happen. Private investors lost something north of 75% of the value of the loans they've made; what haircut has the IMF or French government taken on their holdings of Greek debt? (Hint: Zero.)

deleted 11y ago
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landryraccoon 11y ago
Do you have a citation for this? I looked on Google and didn't see any evidence that creditors were asked to take a haircut on Greek debt. In fact this article on cnbc seems to suggest that Europe is resisting any suggestion of a haircut: http://www.cnbc.com/id/102371294 http://www.cnbc.com/id/102371294 I could definitely be wrong, just want to know where you're getting your information from.
- Lazare 11y ago
  From the wikipedia overview[1]: "A year later, a worsened recession along with a delayed implementation by the Greek government of the agreed conditions in the bailout programme revealed the need for Greece to receive a second bailout worth €130 billion (including a bank recapitalization package worth €48bn), while all private creditors holding Greek government bonds were required at the same time to sign a deal accepting extended maturities, lower interest rates, and a 53.5% face value loss." When you do the math (the maturity extension and interest rate cuts were steep), the total haircut was 75%+, with the bulk of the losses absorbed by French banks. It got a HUGE amount of press back in 2012—at least in the financial press. Google for "greece", "2012", "bond swap", "haircut", "debt swap", etc., you'll find hundreds of articles. Many of which boiled down to "um, if the troika doesn't take a haircut too, it won't fix the core problem, and we'll be right back here in another 2-3 years". They were right too. :( Edit: Your link is part of that. All that's left is government held debt, and they STILL insist on avoiding any haircut, just as they have been this entire time. They were happy to see other people lose their money, but by now we're out of people with skin in the game. All that's left is the troika. Their insistence on avoiding a haircut is why everyone else had to have a 75%+ haircut..and why even that wasn't enough. [1]: https://en.wikipedia.org/wiki/Greek_government-debt_crisis#2010.E2.80.932014 https://en.wikipedia.org/wiki/Greek_government-debt_crisis#2...
littletimmy 11y ago
No, I think you are being too charitable to banks here. Just answer this: where did the bailout money go? Who has it now? Describe to me the flow of money and you'll see that it went to service debt that was held in large part by private institutions. Even if I agree with your argument, I guess what we should say is that the haircut wasn't enough. The lenders should have lost all their money because they debtors are insolvent. There was no reason to involve taxpayer money in this mess.
- Lazare 11y ago
  The debt is held by public institutions, and what money Greece receives from those institutions is going overwhelmingly back to those institutions. > The lenders should have lost all their money "The lenders" are mostly the Troika, and always has been. You seem to be working on a mental model where most Greek debt in foreign hands is owned by private banks (or was owned by private banks, or was originally lent by private banks). Not so. > There was no reason to involve taxpayer money in this mess. Also untrue. A currency union ABSOLUTELY requires large fiscal transfers from richer to poorer regions, probably in the neighbourhood of 30% of GDP for a region like Europe. This has been known for decades. EU taxpayer money was on the hook from the moment the Euro project started. (If EU voters were never told that, that's a separate issue.)
  - littletimmy 11y ago
    You are simply wrong. You have not done what I asked, which is to mark the flow of money to establish your point, nor have you cited a single source apart from Wikipedia. Let me do it for you. Here's an article from WP that claims most bailout money went to pay off bondholders who were in large part european banks and pension funds. http://www.washingtonpost.com/business/economy/most-greek-bailout-money-has-gone-to-pay-off-bondholders/2011/10/22/gIQAsV336L_story.html http://www.washingtonpost.com/business/economy/most-greek-ba... Do you have an agenda here? You seem to be repeating the same thing over and over without providing any sources. To your second point, sure. Why are taxpayers in Germany crying about it now? Let them lubricate their eyes instead with the inevitability of fiscal transfer. In any case, I am not interested in debating this issue. My concern in the original post was the moral discourse surrounding debt, that treats the rhetoric of the moneylender to be the dominant rhetoric.

by Lazare 11y ago

deleted 11y ago

[deleted]

landryraccoon 11y ago

Do you have a citation for this? I looked on Google and didn't see any evidence that creditors were asked to take a haircut on Greek debt. In fact this article on cnbc seems to suggest that Europe is resisting any suggestion of a haircut: http://www.cnbc.com/id/102371294 http://www.cnbc.com/id/102371294 I could definitely be wrong, just want to know where you're getting your information from.

Lazare 11y ago
From the wikipedia overview[1]: "A year later, a worsened recession along with a delayed implementation by the Greek government of the agreed conditions in the bailout programme revealed the need for Greece to receive a second bailout worth €130 billion (including a bank recapitalization package worth €48bn), while all private creditors holding Greek government bonds were required at the same time to sign a deal accepting extended maturities, lower interest rates, and a 53.5% face value loss." When you do the math (the maturity extension and interest rate cuts were steep), the total haircut was 75%+, with the bulk of the losses absorbed by French banks. It got a HUGE amount of press back in 2012—at least in the financial press. Google for "greece", "2012", "bond swap", "haircut", "debt swap", etc., you'll find hundreds of articles. Many of which boiled down to "um, if the troika doesn't take a haircut too, it won't fix the core problem, and we'll be right back here in another 2-3 years". They were right too. :( Edit: Your link is part of that. All that's left is government held debt, and they STILL insist on avoiding any haircut, just as they have been this entire time. They were happy to see other people lose their money, but by now we're out of people with skin in the game. All that's left is the troika. Their insistence on avoiding a haircut is why everyone else had to have a 75%+ haircut..and why even that wasn't enough. [1]: https://en.wikipedia.org/wiki/Greek_government-debt_crisis#2010.E2.80.932014 https://en.wikipedia.org/wiki/Greek_government-debt_crisis#2...

littletimmy 11y ago

No, I think you are being too charitable to banks here. Just answer this: where did the bailout money go? Who has it now? Describe to me the flow of money and you'll see that it went to service debt that was held in large part by private institutions. Even if I agree with your argument, I guess what we should say is that the haircut wasn't enough. The lenders should have lost all their money because they debtors are insolvent. There was no reason to involve taxpayer money in this mess.

Lazare 11y ago
The debt is held by public institutions, and what money Greece receives from those institutions is going overwhelmingly back to those institutions. > The lenders should have lost all their money "The lenders" are mostly the Troika, and always has been. You seem to be working on a mental model where most Greek debt in foreign hands is owned by private banks (or was owned by private banks, or was originally lent by private banks). Not so. > There was no reason to involve taxpayer money in this mess. Also untrue. A currency union ABSOLUTELY requires large fiscal transfers from richer to poorer regions, probably in the neighbourhood of 30% of GDP for a region like Europe. This has been known for decades. EU taxpayer money was on the hook from the moment the Euro project started. (If EU voters were never told that, that's a separate issue.)
- littletimmy 11y ago
  You are simply wrong. You have not done what I asked, which is to mark the flow of money to establish your point, nor have you cited a single source apart from Wikipedia. Let me do it for you. Here's an article from WP that claims most bailout money went to pay off bondholders who were in large part european banks and pension funds. http://www.washingtonpost.com/business/economy/most-greek-bailout-money-has-gone-to-pay-off-bondholders/2011/10/22/gIQAsV336L_story.html http://www.washingtonpost.com/business/economy/most-greek-ba... Do you have an agenda here? You seem to be repeating the same thing over and over without providing any sources. To your second point, sure. Why are taxpayers in Germany crying about it now? Let them lubricate their eyes instead with the inevitability of fiscal transfer. In any case, I am not interested in debating this issue. My concern in the original post was the moral discourse surrounding debt, that treats the rhetoric of the moneylender to be the dominant rhetoric.