The Heart of the Problem in Greece

Coat of arms of Greece since 7 June 1975.

Image via Wikipedia

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, its no surprise that 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 smell when they are being robbed. 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.

via Not the Greeks, But Their Creditors, Are Being Bailed Out | The Big Picture.

This is a common sentiment which has the added advantage of being true. But wait – does this means if the US defaults and somebody (Martians?) arranged a bailout, the bailout would be for the benefit of Chinese and Japanese banks? Technically, it does.

You can make the case that French and German banks were imprudent in lending to Greece, or that Chinese banks are imprudent lending to us, but in the end isn’t it the behavior of the borrower that is the heart of the problem?

Not everyone agrees. Some think that the banks should have been less willing to lend to the Greek government and, because the banks erred in judgement, they should suffer the consequences. The same kind of logic can be applied to the US housing market: people who took out mortgages they shouldn’t have are really victims of banks. Therefore, if we bail out anyone, it should be the victims and not the predatory banks.

All this strikes me as a way of avoiding personal responsibility. The dog ate my homework. It’s not my fault.

I don’t think you can have a successful economy or society based on a culture of victimhood.

The Greeks went nuts funding juicy pensions at age 50 (for example) and borrowed a lot to finance it. Had the banks been stingier, they Greeks would have hit the austerity wall sooner, but not quite so hard. However the blame game gets sorted out, you just can’t live beyond your means forever. Sooner or later, the books must balance.

Politicians love to shower voters with goodies and are often willing to borrow a lot to fund those goodies. The bills will be paid later, by someone else. Hoo boy! Greek politicians are no different from American politicians – it’s the same the world over. Unless we watch them like hawks, this is where they always take us.

The heart of the problem in Greece is the same as the heart of the problem here.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: