In almost every Hollywood movie, some characters will do bad things. They will be ill-mannered. They will be mean to a child or a pet. They will be sneaky and dishonest. The purpose of these incidents is so the viewer can enjoy seeing this character dismembered, tortured, or killed later, guilt-free. It’s not much fun to watch terrible things happen to people at random– they don’t deserve it. So first, we must establish that the character deserves it. Now we can enjoy the violence.
In the same way, the Greeks must be perceived as lazy, self-indulgent, greedy, reckless, and sneaky, before we get to enjoy watching their economy destroyed by the troika (the EU, the IMF, and various European governments). Otherwise, we will feel as though we should help them. That Greek pensioner crying on the sidewalk because he can’t get any cash from the ATM to buy food? He voted for a government that pays people not to work, that hires commissioners to take care of lakes that have dried up, that lets people retire at the age of 40, and so and so on.
I’m not inclined to join the brow-beating because I keep circling back to the same question over and over again: what idiot banker would lend money to an insolvent government?
We know that the banks in North America do not make loans so that they can be paid back. Where’s the fun, and profits, in that? They make loans to increase your indebtedness to the point where you cannot pay off your loan. Instead, you pay high interest rates, in perpetuity, on that loan. That is the banker’s wet dream. The fact that the average American owes about $8,000 on his credit card is proof that the strategy has been widely successful. The fact that 50% of the population do not actually have any “wealth” (read Thomas Piketty) proves that most of us don’t understand how the economy really works.
So the banks were not lending money to Greece so they could improve their economy and then pay them back. They were lending insane amounts of money to Greece in the hope that they would not be able to pay the loans back, but would have to make large payments, year after year, for decades, generating enormous profits for the banks.
In Iceland, the bankers who developed this kind of strategy were fired, arrested, charged, convicted, and imprisoned. Iceland told the banks, this is a capitalist, free enterprise society. You intentionally made bad loans. Your customers can’t pay them back, and you knew it. You lose. Iceland declared bankruptcy and the banks were wiped out. Iceland started new banks to facilitate cash flow and started over. The prison sentences were given because the bankers knew full well what they were doing. Lending enormous sums of money to people or institutions that cannot pay it back is not the result of carelessness, but of careful, conscious planning.
Greece is not the same. But the result should have been the same. Banks, trying to make big money, loaned the Greek Government billions of Euros. Did they check to see if the Greek Government would be able to pay them back? Evidently not. But employees of the bank made millions of Euros in commissions by arranging these loans. In a capitalist system, when Greece could no longer make payments, the banks should have lost their money. The bankers would have been fired. And Greece would have had to start over. Maybe the banks would have collapsed. Well, that’s free enterprise.
But that’s not what happened. Instead, the European governments led by Germany bailed out the shareholders of those banks. Now they want their money back. They did not require the banks to do their due diligence before making their loans, so they have just done an enormous favour to the banking industry. They didn’t punish the bankers for making fraudulent loans and failing to perform due diligence: they rewarded them.
But they don’t tell you that the Greeks must pay them for this favor to the banks’ shareholders.
They say, you selfish, lazy Greeks. You took all our money and now you won’t pay it back. And they act like Alex Tsipras has been ruling the country for 20 years, creating all that debt.
The story continues.
[whohit]Hollywoodizing Greek Debt[/whohit]