In This Greek Crisis, Heads Bankers Win, Tails Bankers Win

Greece’s technocratic government is in the middle of tense negotiations with private sector creditors over the nation’s debts. The dynamics of these negotiations are fairly straight forward. Most private sector creditors want to see the debt Greece owes them restructured by no more than fifty percent as was originally designed at an EU summit back in October. They also want more profitable interest rates on the debt Greece owes them.

There’s also a segment of investors who want to frustrate the Greek government to the point it defaults. Some investors have bought insurance on Greek debt so that if Greece does default, these investors are rewarded quite well. This fact emboldens the private sector creditors to resist the position held by Greek and international officials who want to see Greece’s debt burden reduced much more significantly. This resistance by private sector creditors is now paying off with the Telegraph reporting that Greece will yield to the private sector’s demands.

The bankers successfully gamed the system once again. They will receive new Greek bonds with yields higher than what Greece or the EU wanted. It was either this or Greece defaults and triggers those insurance contracts which would have paid many of the same investors who will receive these new Greek bonds.

The outrageous situation was best explained by Nick Dearden, of the Jubilee Debt Campaign which has been fighting these predatory investors when they were only targeting African nations, not a European country like Greece:

“The Greek economy has been destroyed and it is shocking to see the vultures diving in for the remaining pickings. It is imperative for the whole world that Greece and other debt-laden countries demand and receive broad debt cancellation, combined with strict regulations on the activities of vultures.”


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