The Greek government says the country is on the road to recovery, but that is not what everyday, average Greeks are feeling on the ground. After a massive debt crisis, Europe has become increasingly tired of "bailing out" Greece due to what many call the country's reckless spending and fiscal irresponsibility. But what if I were to tell you that the real story behind the Greek debt crisis has only partly to do with an irresponsible Greek government, and a lot to do with irresponsible lenders? And that the Greek bailouts were never intended to help the Greek people recover, but rather, they were a bailout for the banks.
The original sin of the Greek crisis did not happen in Athens. It happened on those computer terminals, in Frankfurt and London and Shanghai and New York. Yes, the Greeks took the money. But if I offered you €7 billion at 5.3 percent interest, you would probably take the money, too. I would be the one who looked nuts. And if I didn’t even own that money — if I was just watching over it for someone else, as most large investors do — I might even go to jail."
Could this be the solution? Lenders should be held as accountable as creditors.
There is an unsentimental logic to markets. If you make a bad investment, you are supposed to pay the full price — because if you don’t pay the full price, you will keep making bad investments. The only way to get the bond market back to its historic role is to make bondholders feel real fear that they might lose money if they make bad decisions. We need the market to reward bets that are economically wise, instead of those that are politically savvy."