I think Phillip has got that right: the message here is clear and is that bailing out the bankers who lent to Greece (for this is what the bail out actually does) is more important than democracy, the people of Greece and the dashed hopes of a nation.

I am not for a minute saying Greece did not have a price to pay and reforms to deliver: Syriza accepts that too. But the message from the Eurozone is blunt. It is that democracy does not matter and bankers do.

The options left to Syriza are limited. Exit seems very likely indeed. And with it there will be massive uncertainty for Greece, bit also a chance to be a nation.

The European dream will have been sacrificed to bankers.

The consequences are not clear. But in history this refusal by the Eurozone may look to have been a pivotal point when instability was chosen over the chance to hold Europe together.

Damn all of that money is owed to bankers. It’s owed to the taxpayers of the other eurozone nations (at least 60% of it, directly). Other than the Greek banking system there’s near no private sector holding of Greek debt. ECB, IMF, eurozone governments, that’s the vast majority of it.

37 thoughts on “Idiot”

  1. So Much for Subtlety

    In fairness, wasn’t the first round of Greek re-structuring an effort to transfer Greek debt from private European banks to public European institutions? That is, the French and German banks have already been bailed out and left the European tax payers on the hook instead?

  2. SMFS has it spot on – the first Greek bailout was set up to enable to banks to get play pass the parcel with the Greek state debt.

    After all hasn’t that been continued now on a larger scale with QE?

  3. Well, there are some German banks that would take a hit. And UK and US ones, too. They’ve been increasing holdings of Greek debt.

    Most of the debt is held by Eurozone institutions and the IMF, though. This does mean that taxpayers, not banks, would take the biggest losses in a Greek default. The fact that those official holdings are actually an indirect bailout of French and German banks is sadly irrelevant.

    However, we knew three years ago that the PSI restructuring was inadequate and the official sector would eventually have to take a hit. And the PSI had been inevitable for the previous two years. They should never have bailed out those banks in the first place. Greece should have been allowed to default in 2010. It would have been considerably cheaper and better for everybody. Yes, it would almost certainly have meant the collapse of the French and German banking systems and the end of the Euro, but are we really going to shed any tears about that?

  4. The European dream will have been sacrificed

    That, right there, is the whole bloody problem with the Euro. It’s not a dream; it’s a currency. Whether to join it and use it should be a purely hard-headed economic business decision. Instead, it’s a fucking dream. Countries aren’t supposed to join the Euro because it’s useful or appropriate or well suited to their economic circumstances; they’re supposed to join because it’s lovely and will make all the children of the world hold hands and sing in harmony about rainbows because it’s full of fucking unicorns.

    And Merkel’s claim that any country leaving would lead to pan-European war didn’t help either.

  5. Strictly speaking, from the accounting, money owed to banks is not owed to banks but depositors , aside from the capital margin.

  6. So Much for Subtlety

    Dinero – “Strictly speaking, from the accounting, money owed to banks is not owed to banks but depositors , aside from the capital margin.”

    I don’t think that is speaking strictly. I think that is speaking truthfully and sensibly. But if we let the banks go bust, it would cost the shareholders. The ones who did not do their due diligence in supervising what their managers were doing. We would have to pick up the bill in the end, but in the meantime someone would pay.

    I view that outcome with some satisfaction. Capitalism is about risk. There is no risk if we promise the shareholder of Paribas or whatever that they can socialise their losses.

  7. Syriza speak an odd mixture of extreme sense and complete fucking unicorn. My hope is that the chaos, destruction, and misery that will follow Grexit – in Greece – will show up the leftist pipedream of living at others’ expense for eternity for what it is. Greece will make Venezuela look good if they can’t make a deal.

  8. BIG,

    > the chaos, destruction, and misery that will follow Grexit

    Ah, if only. Sadly, though, Syriza are avowedly anti-Grexit, and so are most of the Greek public. And the fuckwits in Brussels built the system with no mechanism to chuck them out.

  9. Frances

    I wholly agree and as a result of our leaders’ delusions the Eurozone -and the rest of us – is stuck between a rock and a hard place.

    What sticks in my craw with Murphy’s post though is the dressing up of all this as some sort of Alamo for democracy. There is a German electorate as well..and an Austrian. .and Finnish..and… They were promised there would be no debt mutualisation. They were promised that they would not be made to pay for the profligacy of other peoples. If the ECB does give in to Syriza then they will have been betrayed. The European federal dream, of which I.am no fan, was based, can only be based, on the idea of Europeans being the demos; not whichever national electorate happens to have voted for a hard – left government this year.

  10. bloke (not) in spain

    It’s always a shame, when we go sticking labels on things, we overlook what’s behind the labels.
    When we talk of the Greeks & their debts we ignore that most Greeks didn’t run up debts. Except in the sense they voted for politicians borrowed money to buy their votes. But the same politicians told them this perfectly alright & who were they to query their politicians? Certainly not sophisticated economists, were they, Costas & Maria?
    When we talk of banks we overlook that the ones who end up losing are the banks’ shareholders & depositors. Not the bankers in their offices. Or it’s the taxpayers who are obliged to bail the banks out. On the orders of politicians & bureaucrats.. But you’re not going to see any of them personally footing the bill.

  11. Of course it has dam all to do with the banks – but the problem is with the Euro project as a whole. Monetary union can only work if there is also political union, which there isn’t in the EU, whatever the institutions might think. The fact is that the various members of the Euro should be sharing the pain, and be held to account democratically, but that hasn’t been happening, and nor will it. There is no mechanism to do it. The individual countries have their own democratic mandates to worry about. Its not a Greek problem – its a Euro problem. If we tried to do this to the Scottish then they would be marching south with Mel Gibson at the fore!

  12. Rob,

    > UK banks have been increasing their holdings of Greek debt.

    Stupid not to. There’s going to be a bailout, isn’t there? The system was built in such a way as to give Syriza all the cards. The rest of the Eurozone can posture all they like, but they can’t chuck Greece out or force them to choose to leave. Syriza refuse to pay under current terms. The only solution is new terms. So, a bailout. Would you like to bank with an organisation too stupid to take free money? I wouldn’t.

  13. bloke (not) in spain

    “The fact is that the various members of the Euro should be sharing the pain”
    But there’s no appetite amongst the ordinary Europeans, who’ll be required to actually suffer this pain, to do so. The Eurocrats & the bancocrats are finding that the cheques they wrote themselves on the surety of those ordinary Europeans are not going to be honoured.
    The technical term’s they’re “fucked”..

  14. Leaving aside the morality, this is an excellent game since the weakness of Syriza’s position makes it very strong and the Euros very weak.
    Yesterday we ended the preliminary posturing stage and so now the parties will focus on downsides. The Euros will wave the Grexit shroud (perhaps a Channel 4 – style Syriza: the first 100 days), while Syriza plays its Russia card.
    My money’s on Syriza.

  15. B(n)is is sadly right. Democracy got sidelined long ago before the Euro began, and the following crimes require punishment:

    1) Allowing non-qualifying countries to join the EZ, thus putting the others at risk (which required ignoring the need for a mandate in the first place)

    2) Failure to enforce key promises, such as the Growth & Stability Pact (no mandate for that either)

    3) No debt mutualisation. (“Until required” wasn’t mentioned).

    The only people paying will be ordinary taxpayers, including those in the UK. I don’t suppose we’ll even see an admission that things could have been arranged better.

  16. Bloke in Costa Rica

    I honestly think Murphy is such a demagogic simpleton that he thinks “bankers” refers to a group of rather portly elderly gentlemen (some with mutton-chop whiskers, some without, but all with three piece suits and watch chains) standing about in a drawing room somewhere smoking cigars and drinking enormous balloon glasses of brandy, genially conspiring against the proletariat.

  17. It’s not just Murphy. Everyone thinks that.

    Have you played that game where you try to tell the difference between cartoons of “bankers” in The Guardian and cartoons of Jews in Nazi pamphlets? It’s a very boring game.

  18. @sq2 “It’s not a dream; it’s a currency. Whether to join it and use it should be a purely hard-headed economic business decision.” –

    no,erm no, eh hum no no no, whether to join the euro should be an entirely ideological decision about whether a people wish to be part of the “European Project”.

  19. So Much for Subtlety

    bloke (not) in spain – “Certainly not sophisticated economists, were they, Costas & Maria?”

    How sophisticated do you have to be to know that running up debt is a bad idea? It is a feature of southern Europe that they are perfectly Tory in their private lives – they don’t run up debt and they like to own their own houses and run their own businesses. They know what fiscal prudence is. But when it comes to governments, they are like teenage Trots. Hyperinflation? Can’t wait!

    Costas and Maria (really? Maria in Greece?) were not fooled. They were not idiots. They knew their politicians were lying venal scum. They would be too if they were elected so they are comfortable with that sort of politician. And when their politicians told them that the idiotic Germans were willing to give them loads of free cash, of course they laughed and laughed and laughed – and took the cash. They knew it would never be paid back. It never is. The politicians did not steal it all. Some of it filtered down to their village. And so everyone had a good chuckle and the naiviety of these stupid Northern Europeans and spent like the bills would never come due.

    “When we talk of banks we overlook that the ones who end up losing are the banks’ shareholders & depositors.”

    No they won’t. If only.

  20. So Much for Subtlety

    Tim Newman – “Callas, for example.”

    You mean Sophia Cecelia Kalos? Or Anna Maria Sofia Cecilia Kalogeropoulou if you must?

    Of course there are always going to be Christians called Mary, but is Maria such a common name in Greece? I am surprised. I have never met a Greek Maria. It didn’t occur to me it was that popular – it is not like Spain where you can’t ask for “Maria” because there are so many of them (or used to be before they got American TV). You have to say “Pilar” or “Conception” or something because every woman is called Maria. And half the boys.

  21. bloke (not) in spain

    OK SMFS
    Half the Greek women I know are Marias, but just for you Androula (Maria’s sister)
    But when will it get through to you, the Costas & Androulas of this world don’t run up debts. They pay for things out of their wages. And this applies to a great many people in Europe & not a few in the UK.
    It’s the middle classes who run up debts. Both personally & through managing the system. And it’s not the Costas & Androulas of this world who provide the bank deposits fund the debts. Because they haven’t anything left in their pay packets.
    And if you think the Costas & Androulas are going to go through years of hardship to dig the middle classes out of their own shit. Particularly as said middle classes have no intention of enduring any hardship themselves. You’ve a surprise coming.
    It’s something people really don’t get. The system falling over doesn’t worry Costas & Androula at all. They’ve no stake in it.
    And the above applies right across Europe. They don’t need you.

  22. So Much for Subtlety

    bloke (not) in spain – “Half the Greek women I know are Marias, but just for you Androula (Maria’s sister)”

    I know an Androula. Much happier.

    “But when will it get through to you, the Costas & Androulas of this world don’t run up debts. They pay for things out of their wages. And this applies to a great many people in Europe & not a few in the UK.”

    First of all, notice what I said – “How sophisticated do you have to be to know that running up debt is a bad idea? It is a feature of southern Europe that they are perfectly Tory in their private lives – they don’t run up debt and they like to own their own houses and run their own businesses. They know what fiscal prudence is. But when it comes to governments, they are like teenage Trots. Hyperinflation? Can’t wait!”

    Yes, I know that they tend not to run up debts. But the point I was making was the distinction between public and private life. Mediterranean society is extremely low trust. You don’t borrow or lend in such a society. But that also means you don’t expect your government to be honest or do stupid things like paying back their debts. On the contrary, the entire purpose of government is to loot the weak and the stupid and hand it over to the powerful and connected.

    And it’s not the Costas & Androulas of this world who provide the bank deposits fund the debts. Because they haven’t anything left in their pay packets

    That used to be true-ish but not really. My experience of the Mediterranean is that they don’t save in banks. But they did like to bury gold coins in the dirt under their beds. Greeks always save. Education and medicine might be free, but if you want medicine or your children to be accepted, you have to pay bribes. So you need to save. But not obviously in a public document like a bank book – because then your relatives would demand a share. You save secretly. You can see this at any Greek wedding. Suddenly people who claim poverty are able to pin 100 euro bills on the bride’s dress.

    I also think the move to paper currency and then the inflation has, oddly, meant people are more willing to save in a bank. What choice is there? But save they do. Just informally.

    And if you think the Costas & Androulas are going to go through years of hardship to dig the middle classes out of their own shit. Particularly as said middle classes have no intention of enduring any hardship themselves. You’ve a surprise coming.

    As I said, a lot trust society. But they don’t really have a choice. They will continue to avoid the state and its tax demands. And their relatives and their charity demands – but not openly because you never know when you might need your cousins. However in the end, no one else is going to save Greece except the Greeks.

    It’s something people really don’t get. The system falling over doesn’t worry Costas & Androula at all. They’ve no stake in it.

    Of course. A low trust society. They are not part of it, they do not identify with it, they steal from it whenever they can. They will survive. But that is why Greek finances are in such a mess – they are only conservative in their private lives. The State is an instrument for looting the weak and stupid. They know it and they accept it.

    And the above applies right across Europe. They don’t need you.

    Greece can’t feed itself. They have lived for two generations as pensioners on northern European hard work and diligence. Yes, they do need us. Or they can go back to Egyptian levels of poverty.

  23. Ironman

    Not sure if you have seen the comments – a new moron ‘James Lloyd’ is worth reading- also Murphy’s indulgence of the blatant ad hominem – I seem to recall him saying ‘Worstall permits abuse – I do not and am proud of that fact’ – what an utter hypocrite….

  24. Van

    The personal abuse running through that thread was being actively en our aged by Ritchie. But he’s a hypocrite, we know that.

  25. Squander

    I just assumed you were too busy with Russell Brand and had become too grand to slag off the likes of us. My mistake

  26. “Greece can’t feed itself. They have lived for two generations as pensioners on northern European hard work and diligence”.

    Exactly, we in the North have done everything right, and will now have to pay.

    We elect decent governments always, May is going to be another very tough choice, we don’t permit idleness, and work work work so we can save save save. The fruits of our labours are then stolen to keep the Greeks in plenty.

    Some would argue that the EZ rules disallow profligacy of this sort, and that some Northern governments were involved in setting the EZ up. That can’t be true.

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