Yves here. This is an excellent background piece on how Greece got where it is and how its various bailouts were structured. It also helps explain the past and current roles the various members of the Troika play and discusses the prospects for Greece achieving its aims.
By T. Sabri Öncü, (sabri.oncu@gmail.com), a financial economist based in Istanbul, Turkey who was recently the Head of Research at the Centre for Advanced Financial Research and Learning, Reserve Bank of India. Original published on February 14 2015 in the Indian journal Economic and Political Weekly
Can the Syriza government in Greece maintain an impossible triangle: (1) stay in power, (2) reverse austerity, and (3) stay in the euro? It will all depend on whether the European Union sees itself as a progressive ethical project of civilisation based on liberal market principles or as an anti-democratic imperialist project of international finance capital.
On 25 January, Syriza won the Greek elections but fell two seats short of the 151 seats it needed to form the government on its own. Subsequently, it formed a coalition government with the 13-seat Anel party the next morning. Syriza (an acronym of Synaspismós Rizospastikís Aristerás) is a coalition of the radical left as its Greek name indicates. Anel (Independent Greeks) is a conservative nationalist party which opposes austerity. Alexis Tsipras is now the Prime Minister of Greece whereas the economist Yanis Varoufakis is the current fi nance minister.
Since the formation of the new government in Greece, Europe is in flames and the world is watching. Consequently, Tsipras, Varoufakis, the European Union (EU), the Eurogroup and the Troika have become household names. (The “Troika” consists of the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF).) The EC is the executive body of the EU. The Eurogroup is a conference of finance ministers of the 19 euro area (eurozone) member-states for the discussion of matters related to the euro.
Macroeconomic Adjustment Programmes
The Eurogroup provided the bilateral eurozone member-states loans pooled by the EC into the so-called Greek Loan Facility (GFL). The €77.3 billion GFL was part of a 2010 joint “financial assistance (bailout loan)” package, with the IMF committing an additional €30 billion. Provided on 2 May 2010, these bailout loans were made to “support” the fi rst Macroeconomic Adjustment Programme (MAP) for Greece. The loans were to be disbursed from May 2010 to June 2013 in a certain number of tranches.
In addition, the Eurogroup controls the European Financial Stability Facility (EFSF) and, its successor, the European Stability Mechanism (ESM). Established in June 2010, the EFSF was a private company — a special purpose vehicle — created as a temporary crisis resolution mechanism. Established in September 2012, the ESM is an international organisation created as a permanent rescue mechanism with the same mission as the EFSF: to “safeguard” financial stability in Europe by providing bailout loans to the eurozone countries. The ESM and EFSF now share the same staff and offices.
Unlike the GFL and like the EFSF, the ESM funds its operations by issuing money market instruments as well as medium and long-term debt. Currently, the ESM is the only rescue mechanism. The EFSF will not provide bailout loans to any more countries. However, it will continue its operations to make payments on the EFSF debt, roll over the EFSF debt since the loans it made are of longer maturities than its own debt and collect payments from the debtors until loans are redeemed.
Bailout Package of 2012
On 14 March 2012, the Eurogroup approved a second bailout package, this time, to “support” the second MAP for Greece. The eurozone member-states and the IMF committed the undisbursed amounts of the GLF with an additional €130 billion to be disbursed in tranches between March 2012 and the end of 2014. In this second package, the loans the eurozone member-states committed were to be made through the EFSF. The total commitment of the package was €164.5 billion. The EFSF was to contribute €144.7 billion, while the IMF was to contribute €19.8 billion.
The MAPs were imposed and overseen by the Troika. The programmes consist of (1) fiscal reforms to “generate savings,” that is, “austerity,” (2) structural reforms to “enhance competitiveness and growth”, such as privatisation of public assets and deregulation of the markets including the labour market, that is, “labour market flexibility,” and (3) financial reforms to “enhance financial stability”, such as banking regulations, and bank recapitalisation and resolution mechanisms.
It is claimed that the ECB is in the Troika to provide technical expertise, it is not a bailout creditor. But, it is still a creditor to Greece through its Securities Market Programme (SMP), which ran from May 2010 to September 2012. Indeed, the SMP was created in response to the Greek debt crisis, which triggered the ongoing European sovereign debt crisis. The stated purpose of the SMP was to purchase government bonds in secondary markets, to provide liquidity and thereby alleviate pressures from sovereign debt risk on the balance sheet of monetary finance institutions. In February 2012, shortly before the Greek debt restructuring, the ECB holdings of the Greek government bonds through the SMP amounted to €42.7 billion.
Liquidity Provider
In addition, the ECB is the liquidity provider to the banks in Greece in two ways. The fi rst is through its monetary policy operations. The second is through its control of Bank of Greece (or any national central bank in the eurozone) which extends emergency liquidity assistance (ELA) to solvent domestic lenders facing temporary liquidity problems. In both these operations, lenders pledge acceptable quality debt securities as collateral for central bank loans. The ECB determines the acceptability criteria.
Prior to the second programme, it became evident that without debt reduction Greece would default. Since the debt held by the official holders could not be restructured, it was agreed that Greece would make an exchange offer to the private holders. The total face value of the then privately held public bonds was €205.6 billion: €184 billion of Greek Law whereas €21.6 billion was of Foreign Law. Two common components of the sovereign bond contracts are the “pari passu” and “collective-action” clauses. The former ensures that the issuer treated identical bondholders identically, with the understanding that some senior creditors such as the IMF would be treated differently. The latter is a clause that applies the terms of an exchange to all creditors once a specified majority has agreed to it. The Greek bonds did not have these clauses.
Since most of these bonds were Greek Law bonds, Greece could modify their terms as it liked. In its exchange offer in March 2012, Greece passed a law to add collective-action clauses (CACs) — where a majority meant 50% — to the Greek Law bonds retroactively. When more than 60% of the Greek Law bondholders signed on, Greece invoked the CACs and, as a result, a significant portion of the Foreign Law bondholders decided to participate as well. After a second exchange in April 2012, Greece was able to restructure 96.9% — €199.2 billion — of the offered €205.6 billion, leaving holders of the remaining €6.4 billion as holdouts. That the bonds did not have the pari passu clause turned out to be a blessing, since Greece could pay the holdouts in full without facing litigation. So, the bonds the holdouts owned remained on its balance sheet.
Based on the face value of the debt, this was the largest sovereign debt restructuring in history. It is this restructuring the German Chancellor Angela Merkel refers to when she denies a second debt relief to Greece. On paper, the reduction was 53.5%, indicating a debt relief of €106.6 billion. However, the actual amount of debt relief was much less. The new debt swapped for the old debt was a portfolio of four instruments, two of which were the EFSF notes. They totalled €34.7 billion which Greece had to pay back to the EFSF. Further, since the Greek banks were among the private holders, they lost €25 billion in the exchange and had to be recapitalised. For this, Greece had to use €25 billion of the loans it borrowed from the EFSF for bank recapitalisation. Therefore, the actual debt relief was €46.9 billion, a measly 23.4% of the €199.2 billion.
But, how did Greece end up in this mess? To answer this, let us go back to 2001.
Origins of Greece’s Problems
For an EU country to enter the eurozone, the country must meet the 1992 Maastricht Treaty (the treaty that established the eurozone) limits on debt levels and deficit spending. Despite meeting the Maastricht criteria with difficulty, Greece entered the eurozone in January 2001. From 2001 to 2007, the gross domestic product (GDP) of Greece grew at an impressive average annual rate of 4.3%, compared with the eurozone average of 3.1%. Incidentally, this period intersected with the 2002–07 monetary expansion in the advanced capitalist countries (the United States, the United Kingdom, Germany, France and the like) of the centre. In search of high yields, private capital started to flow from the centre to the periphery which includes Greece, creating excessively easy credit conditions.
Easy Credit
Indeed, the primary drivers of these impressive growth rates were the easy credit which fuelled private consumption and government spending, although the EU contributed also by financing some public investments. Unfortunately, a significant portion of the credit-fuelled government spending was on non-productive purposes such as the 2004 Athens Olympics. Another unfortunate key component was military spending, notably on German ships and tanks — about 3% of the GDP in the period, the highest in Europe.
Then came the Great Recession in the US, which lasted from January 2007 to June 2009. Further, in June 2007, the Global Financial Crisis (GFC) hit the US. When Lehman Brothers collapsed in September 2008, both the GFC and Great Recession became global. Under these conditions, the private capital flow surge that started in 2002 from the centre to the periphery suddenly reversed in 2008. Both of these adversely affected not only the Greek economy, but also its ability to roll over its debts. Unlike noneurozone peripheral countries with their own domestic currencies, Greece was unable to devalue its currency and raise the interest rates to weather the storm. Greece was in trouble.
With hindsight, we now know that from the beginning until 2009 the Greek governments had been masking their sovereign debt and budget deficit through “creative” accounting and Wall Street (Goldman Sachs, in particular) assisted financial engineering, involving off-balance sheet transactions as well as complex currency and credit derivatives. Although Greece had managed to get away with massaging its balance sheet for years, the balance sheet cosmetics became evident in early 2009. When the Papandreou government which was elected in October 2009 stopped the massaging and released the true numbers, it became evident that Greece was not suffering from illiquidity. It was insolvent.
Then the hell broke loose and Greece ended up in the mess that started in May 2010.
Fast forward to today, despite two bailouts and adjustment programmes Greece has been in depression since the beginning of 2009. The Greece’s GDP is down about 25% from its peak in 2008, unemployment is at about 25%, youth unemployment is above 50%, Greece’s public debt to GDP ratio is at about a mind-boggling 175% and many Greeks are lining up for soup in front of soup kitchens reminiscent of the soup kitchens of the Great Depression of 1929.
And they call this a bailout.
Beneficiaries of Bailouts
However, no one can debate that Greece’s private lenders in general, and German and French banks in particular, benefited from these bailouts. According to the Jubilee Debt Campaign, 92% of €240 billion Greece has received since the May 2010 bailout went to Greek and European financial institutions. Furthermore, the restructuring of 2012 led to a holder transformation of the Greek public debt. While more than 60% of €356 billion Greek public debt was held by the private lenders at the end of 2011 this percentage was less than 25% at the end of 2012. This percentage fell way below 20% of €315 billion Greek public debt at the end of 2014, with the Troika holding 78% of this debt.
Varoufakis appears right when he claimed that it was the banks that got bailed out, not Greece and that Greece got deformed, not reformed!
When the Syriza government started its journey on 26 January 2015, its main objectives were to (1) write off 50% of its sovereign debt, (2) reverse austerity, (3) reverse structural reforms, and (4) remain a eurozone member. Since then, Tsipras and Varoufakis have been negotiating with their creditors to no avail. Varoufakis even went on a road show to gather support from several other European finance ministers, again to no avail.
From day one, Merkel, the chancellor of Greece’s largest eurozone creditor, Germany, and Mario Draghi, the Governor of the ECB, made it clear that debt write-off was a no go. So instead of debt write-off, Varoufakis proposed a “menu of debt swaps” consisting of two types of new bonds: one, a floating coupon bond whose coupon indexed to nominal GDP growth to replace eurozone bailout loans and the other, perpetual bonds, which defer the principal payments for eternity, to replace ECB-owned Greek bonds. This did not fly either, signalling the creditors of Greece have no intention to negotiate and expect Syriza to cave in.
Rebuffing Syriza’s Attempts
On 4 February 2015, the ECB dealt the final blow to Syriza’s attempts to rewrite the terms of its ¤240 billion bailout. It lifted the current waiver of minimum credit rating requirements for Greek government debt as collateral in its monetary policy operations. Since the Greek bonds are junk rated and hence below the acceptable minimum, this means that Greek banks will no longer have access to regular ECB loans which are cheap. Greek banks will continue to have access to central bank funds to meet their liquidity needs through the ELA of Bank of Greece. But the ELA loans carry a higher interest rate. Given the liquidity needs of the Greek banks because of increased withdrawals after the elections, there are now fears that the Greek banking system might collapse and Greeks are back in the streets, this time, protesting not against their government, but against the ECB.
After these developments, the question remains whether Syriza can maintain what some have called the impossible triangle: that is, (1) stay in power, (2) reverse austerity, and (3) stay in the euro. Whether Greece will exit or be forced to exit the eurozone, and, if Greece exits in one way or another, whether this will lead to the end of the eurozone and the euro is difficult to predict objectively. Indeed, as Antonio Gramsci claimed in The Modern Prince:
But it is absurd to think of a purely ‘objective’ prediction. Anybody who makes a prediction has in fact a ‘programme’ for whose victory he is working, and his prediction is precisely an element contributing to that victory.
What Is the EU?
Some used to claim that the EU was a progressive ethical project of civilisation based on liberal market principles, standards of democratic governance and the rule of law. Others used to claim that the EU was an anti-democratic imperialist project of international finance capital under the hegemony of Germany.
Given what has been going on in Greece, I wonder which one?
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Thanks for sharing! Found this really informative.
Seems like someone wrote the post I wanted to write.. Now if it only was spread more widely…
I am still a bit confused here about where the truth lies.
The Greek position as I understand it is that they simply cant pay the loans because the repayments are destroying their economy and hence the capacity to undertake the repayments. This suggests the Troika position will simply kick the can down the road irrespective of who is in government in Greece leading to a crisis one way or another and need for a new strategy. So why not implement the latter now?
Or is there a serious plan where austerity leads ultimately to recovery which to judge by the rest of Europe isnt a viable option either anymore than Japan’s failed attempts of the past 20 years to solve similar problems were.
So what is the endgame here? Indeed what is the game full stop?
Endgame- Non-greek Euro banks that are ‘solvent’
Game- Use greek tax revenue to pay off said euro banks. It’s not like anyone, is wiling, or able to stop them.
Try to understand the motives. Austerity is cover for privatisation of public services, further financialisation and reduction of wages. There will be no end to austerity until everything is privatised, the welfare state is no more and workers salaries are at rock bottom. At which point all government spending will be for corporate welfare or warmongering and we might see a reversal in policy.
That was exactly all that the Argentinean experience was about. But at the end of the road, what we managed to have (and it cost us many lives) was a popular upheaval that opened up the gates for a more patriotic government (the one that is now under corporate fire) to change the bearings.
+1 Our aspiring overlords have discovered a means to get the benefits of war without the bad PR. On the other hand, maybe it goes back further. When was the last time an international loan was made other than to provide a mechanism for enslavement? (Ignoring the criminal public guarantees of private debts.) Greece must default. To sweeten the deal, I will spend my next four vacations there if they do. Never been and I hear it’s nice. I sure as hell am not vacationing in Ireland.
Tks all. What puzzled me was it seems likely that eventually Greece simply wont be able to pay leaving default to occur anyway leaving the rentier capitalists up the creek. Your propositions seem to explain things in terms of the great neoliberal conspiracy – trilateral commission, the 200 families, Davos, Bildebergs, maybe even the Illuminati.
I’m not saying this is or isnt the case for the moment.
I’ve always been skeptical of this grand conspiracy idea simply because so many of the ruling classes are pretty stupid e.g. George Bush jr and the Republicans, their ecomomic road is self defeating (climate change and resource depletion will hit them hard which they would know if they actually were intelligent enough to mount said conspiracy), the logistics of such a conspiracy seem a bit too great to pass my laugh test (there are just too many of them to sensibly coordinate it), and it smells of “the Protocols of the Elders of Zion”.
But I have to admit after watching this madness in miniature here in Australia in the form of the current government where said conspiracy does seem to be real and open and occurring despite the grotesque stupidity of its proponents – Murdoch, the miners, conservative think tanks and a very reactionary national government – I guess some equivalent of this grand conspiracy is plausible.
I’ve also seen a curious ‘risk assessment’ recently published by the Davos WEF lot of interest because it put water as a major concern far higher than current discussions would have us believe. The assessment basis wasnt clear (possible drivers include Texans drinking their own wastewater apparently with gusto? California being dryazzabone? and Mesopotamian climate change impacts?=Isis). It looked like the form an Illuminati discussion paper might take.
I’ll have to think more on this and its implications starting with the question of how this “conspiracy” (probably bad word) works in practice beyond the usual cliches and how the motivations behind this craziness of driving Greece beyond the wall work. ‘Teaching all dissenters a lesson” seems plausible but the stakes seem to high.
‘The Greek position as I understand it is that they simply cant pay the loans because the repayments are destroying their economy and hence the capacity to undertake the repayments’
It’s more than that. Its that they reject the medicine prescribed, given that:
(a) it has failed to generate sufficient growth to repay debt
(b) it has led to widespread impoverishment and misery
(c) any profit it does realise repairs the balance sheets of reckless banks in the larger nations rather than assists in the recovery of Greece
(d) it sells at fire sale prices jewels of the Greek patrimony in order to feed the unquenchable thirst of finance capital (assets that, if capital finds them so attractive, would be prime candidates in public hands to help generate the debt service required)
(e) it – austerity and privatisation – has never worked for anyone except finance capital, any time or anywhere, and is in truth part of the final strategy in capital’s long war on labour,
(f) and so Greece realises it is a turning-point test-case, right now carrying the hopes of a reasonable future for all of us on their backs, and
(g) if they consent to take this poisonous ‘medicine’ they are basically surrendering their national sovereignty and rendering pointless the citizenry’s right to vote – saying in effect goodbye to democracy, even freedom itself, and hello and welcome to debt peonage and slavery.
You don’t need to imagine organised conspiracy, though in pockets that exists. It’s like the Deep State hoo-ha here a while ago; sinister cabals aren’t necessary in an environment where human greed is not just tolerated, but celebrated.
Quite right. It is not about debt, but about degradation, humiliation, peonage, enslavement. The Greeks want to pay their debts. They probably could! The Euroblob won’t let them. The poison the creditors prescribe actively prevents legitimate debt-repayment, which therefore cannot be the goal. Under any intelligible reckoning or legal system the creditors’ own actions are nullifying (much of) the debt .
I don’t think “conspiracy” applies here. It’s just a bunch of a*holes doing what they’ve always done: robbing the rest of us to enrich themselves and feeling wonderful about it. This time they are exploiting the flawed philosophy that is free market capitalism. Next time, who knows? What makes a good or bad society is only the degree in which such crimes are allowed. I think overall humanity is moving toward better ways of living. It’s just that life is a grand experiment and you won’t get to those better ways through any other path. But this means, unfortunately, is that we are all lab rats.
If it is all a Big Social Class Club with different venues ( Bilderberg, Davos, Bohemian Grove, etc.) where various club members and upper-servants get together to get eachother on the same page, one need not invoke Conspiracy. Overclass Interest and Allegiance may be enough. Naturally the various bunchloads of Overclassmen and/or their butlers would want to keep their meeting-venues exclusive and their meetings closed. Naturally their spokesmouths in the media and elsewhere would accuse people who wonders what goes on in these meetings to be hustling CT.
But there is probably a lot of Vulcan mind-melding going on all the time among these people, beyond and outside of any specific venue or meeting.
All of the EU’s various “financial mechanisms” were deals created by financiers to put together private equity to finance Greece (and other hapless souls). Nobody mentions the City of London or Wall Street. Wonder why. This points out how blatantly egregious financial wizards are willing to be. After they blow up the entire structure of global finance, bringing banking to a screeching halt because no bank will deal with another, (that speaks volumes, no?) then they all get together and decide they will pool their “money” and loan it to bankrupt countries. Bankrupt countries – that phrase also speaks volumes. To cloak all this looting in the name of the European Union (to imply it is governed by some level of democracy) is the cherry on top. It’s privateering at its worst.
+10 STO!
Yes, musical chairs, hot potato, whatever you want to call it, it was schemed up on Wall St & City, then the grenade thrown to EU, but not sparing UK or USA from vulture capitalization and destruction of democracy, which occurs under the cover of police state masquerading as race wars, war on terror, etc!
This drama shows Obama’s “teensy weensy” stimulus as the Wall St fig leaf, as distraction from the naked emperor!
Now Syriza says it isn’t willing to wear the phallic decoration as EU’s court jester!
Who is watching the oligarch yacht population in the Med? Adriatic coast is open….France?
And at the same time they seem hell-bent on sending loads of money to the coup government in the Ukraine. Of course the only time a fisherman gives a fish food is when they’ve impaled said food on the hook they hope to snag the fish on. They don’t do it once it’s flopping around in the bottom of the boat. That’s when they bring out the club.
+1. Cracking metaphor that one.
Some used to claim that the EU was a progressive ethical project of civilisation based on liberal market principles, standards of democratic governance and the rule of law. Others used to claim that the EU was an anti-democratic imperialist project of international finance capital under the hegemony of Germany.
Given what has been going on in Greece, I wonder which one?
I think the cleverness of the EU is that is has always been able to pretend that it was both things at the same time. If there’s one good thing to come out of the Greece debacle (if not for the Greek people), it’s that the EU’s mask has begun to slip a little and the neoliberal cloven hoof is now showing. Or maybe it’s just the neoliberals’ cohort in the EU is getting the upper hand against the old-fashioned liberal powerbase.
Leonidas Chrysanthopoulos, a former Greek ambassador:
The bottom line is GLOBALLY there are few jobs for the youth coming of age. This is the crisis. Young people with NO jobs options and no investment in a society will eventually become violent…due to hopelessness.
The masters of the universe appear to be stupid unless they have some plan to exterminate huge numbers of youth.
The problem is indeed global. But it goes far beyond the issue of jobs / full employment. If you replace human labor with machinery and computers, you can not rationally impose a requirement to work in exchange for the means of subsistence. The much vaunted services industry jobs that were supposed to replace all this displaced human labor have turned out in practice to be MILITARY SERVICES jobs for the 99% and money creation jobs – AKA financial engineering – for the 1% and their employees.
There is indeed much work to be done repairing the damage to the global economic infrastructure caused by a century of economic sabotage (to provide ever-expanded opportunities for rent-seeking) and laying the foundations for a sustainable future. But the rest of the world needs to decide if there really is a ‘right to life’. The rentiers have not been “euthanized”. They have become the ‘giant vampire squid’ sucking the life out of humanity. It is way past time to stop pretending there is some financial engineering alternative to challenging the squid’s primal lust for ever more money and power.
THE INVERSION OF SCIENCE and a Scheme of Scientific Reformation, Frederick Soddy. M.A., F.R.S.
LONDON, HENDERSON, 66 CHARING CROSS ROAD, 1924
Well . . . why wouldn’t they? Blackwater-Xe-Academi, Triple Canopy, etc. Police offering a little taste of future methods at Occupy Events. LRad sound cannons, Raytheon portable field-mobile aimable microwave Oven death-rays, etc.
If rebellion gets big enough, certain parts of government at-the-very-least will use Assadian methods against
rebels or even dissatisfied marchers. Perhaps people should think about passive-aggressive methods of passive obstruction, uncivil obedience (grudging obedience to orders without any compliance to wishes or expectations), etc.
How can the answer to your final question not be that the EU is a technocratic imperialist financial construction when you know that the EU knew quite well that the Greek accounts were rigged when Greece joined the Eurozone?
Had the EU been even sllghtly ethical, it would have advised Greece to put its house in order before joining. But no, the banksters behind the whole setup thought they could make some more money with Greece.
Dear Gerldam,
Is my answer to my final question not obvious?
It has to be remembered that the Greek deals with Goldman were not so secretive. The EU knew, and in fact, the decision to count currency swaps off the books was made by Euro finance ministers, much to the disapproval of accountants. Here’s an article from 2003 on the matter: http://www.risk.net/risk-magazine/feature/1498135/revealed-goldman-sachs-mega-deal-greece
Don’t let the bankers keep claiming, “We didn’t know.”
Yeah, that’s the awkwardness that can’t be acknowledged. The banksters knew exactly what they were doing, and they were doing it at the behest of governments themselves. It’s a testament to how firmly entrenched the ‘we didn’t know’ meme is that even among more intellectually minded people generally hostile to neoliberalism, this idea is still almost universally (and unconsciously) a fundamental premise.
It boggles my mind that people are still writing things like that.
Every subplot has to tie back into the narrative of Progress. Also, with the management class having trained most people to deploy Hanlon’s Razor reflexively to protect the privileges of bourgeois authority, playing dumb becomes a ready-made cloak for any kind of malice one wishes to pursue (cf. Matthew 10:16).
Hanlon’s Razor is how Western societies reproduce gullibility.
Question: since it was banksters, not people, not the country(ies) that got bailed out (worldwide except in Iceland), could not Greece punitively nationalize its big banks that made a mint on the financial bailout? Use the proceeds of nationalization (seizing the ill-gotten loot of the 0.01%ers running the scheme) to cover some of its obligations? Perhaps this in combination with TANs as written about in the other post would not only extract true justice for the Greek people, but also punish the kleptocratic way finances were handled by the ECB in its hollow “bailouts”.
I would be concerned that Greece’s big banks may be insolvent, too, and that nationalization might just result in the consolidation of obligations of insolvent banks with those of the insolvent Greek government. There would be some eliminating entries in such a consolidation (Greek government bond obligations owed to Greek banks could be eliminated, I suppose) but the net result of a consolidation not be an improvement for the Greek state. I thought the reference to “Greece’s private lender” did not refer to Greek lenders, but to private lenders who extended loans to the government of Greece, including the French and German banks referred to in that context.
‘could not Greece punitively nationalize its big banks that made a mint on the financial bailout? Use the proceeds of nationalization (seizing the ill-gotten loot of the 0.01%ers running the scheme) to cover some of its obligations?’
Surely most of that has flown the coop, probably into bailed out banks in other countries.
Ain’t globalisation grand?
I believe that is what Leonidas Chrysanthopoulos, a former Greek ambassador is suggesting, as stated in the block quote enclosed in a prior comment.
Great review. Thanks!