Spiegel Online International is describing another European hare-brained scheme in the mill for “bailing out” Greece.
Greece’s lenders are reportedly considering further relief in the form of a partial debt haircut for the crisis-wracked country, the Financial Times Deutschland reported on Friday.
Martin Blessing, chairman of Germany’s second-largest bank, Commerzbank, has also said a second debt haircut is likely. ”In the end we will see another debt haircut for Greece, in which all creditors will take part,” he said on Thursday in Frankfurt.
And though a second debt haircut would be tantamount to bankruptcy for Greece, it would also enable Athens to tackle the extreme debt that has so far hindered economic recovery.
And in a blatant case of demanding this be done with OPM (at least from the IMF’s perspective; the IMF wholeheartedly approves this second bailout),
[T]he IMF is pushing for debt restructuring from public lenders, who currently hold over two-thirds of the country’s total debt of some €330 billion [$426 billion], according to the newspaper. However, neither the IMF nor the ECB would take part in such a debt haircut, placing the burden on the euro-zone members, the paper added.
I have a couple of questions. Wasn’t the first haircut, functionally, a Greek bankruptcy?
Second, if you’re not going to hold the Greeks accountable and responsible for their obligations and commitments, why bother at all? Why not just forgive the entire debt, and let them resume their profligate ways? You’ll only bail them outprop them up again, next time, anyway.
In the end, here’s the IMF (and ECB, but at least this organization has honorably committed its own creditors’ money) saying, “Debt. Very dangerous. You go first.” Still, the burden, as the IMF and ECB suggest, should be wholly within the euro zone, or rather (say I) more particularly, it should rest entirely with the private investors who loaned their money to Greece—the private holders of Greek sovereign debt. Europe’s taxpayers should not be—should not have been—put on the hook any further than they already were from the moment it became known that the Greek government was unable to repay its debt. Indeed, those taxpayers should not have been put further onto the hook from the moment it became known that the Greek government had lied about its financials in order to gain admittance to the euro zone.
Here’s an alternative thought—work with me on this; it’s an idea of responsibility—how about not bailing them out, again? Instead, let them go bankrupt, and thereby free them to start over.