So the bankers whose excesses helped land Europe in this mess then get to sit round the big EU table, like any other government, and decide who should pay for it. And the answer, unsurprisingly, is: not them. The bigger question is: why finance has been granted such power?
This isn\’t the usual Guardian writer knows fuck all about finance. This is stark staring madness of the Eoin Clarke type.
First he tells us that the bankers only took a 20% haircut. He should have a look at the prices today: 80% is more like it.
Then he babbles on about how appalling it is that the bankers had a seat at the table when how much money they would lose was discussed.
Erm, when you can\’t pay your creditors yes, you do sit down and talk to your creditors. Because you want to make an agreement with them. You want the whole thing to be voluntary.
And why did Greece want it all to be voluntary? Because they\’re still running a primary deficit. Which means that even if they blew everyone off with an involuntary default, rather than a voluntary restructuring, then they\’d still need to continue borrowing money.
Who will lend you money if you\’ve just stiffed everyone? Not the private markets, leaving only the IMF and possibly the ECB. However, neither of those will lend to anyone who is in default. You have to be at least paying lip service to the idea that you\’re negotiating with your creditors.
So, everyone negotiates with their bankers in order to get them to agree to the haircut. Because without their agreement you can\’t go to the IMF. And you do need to go to the IMF because you still need to borrow money.
This is the sort of thing I would expect the economics leader writer of a great national newspaper to understand rather than filling his readers\’ heads with Rosicrucian style nonsense.
Finally, if the bankers lost 80% of their loans, why hasn\’t Greece\’s debt been cut by 80%? Because the official creditors, the IMF, ECB, EFSF and all the rest did not take a haircut: and they owned the majority of the debt at the time of the haircut.
Seriously, this piece would be shamefully ignorant even if it were in Socialist Worker. If Alan Rusbridger actually knew anything about the subject himself he\’d fire Chakrabortty for writing such tosh.