International Creditors Trying to Weigh Greece’s Default on Ordinary Greeks
The years of financial crisis we’ve lived through can be entirely described as people being forced to pay for the bankers’ crisis. The prospect of a default by Greece was a rare instance when the people could refuse to pay any more for the crisis and let the bankers keep to themselves the results of their disaster. However, the international creditors are hard at work trying to put together a structured default that would, in a type of controlled demolition, crash down on Greek pensioners instead of the large financial firms of London, Paris, New York, and Frankfurt.
Greek economist Costas Lapavitsas explains:
“The losses for international banks would be modest. Even so, they are angling for a higher interest rate, although their bargaining power is weakened by reliance on the state for liquidity and capital. The real blow would fall on Greek banks, which would effectively go bankrupt. The Greek state is thus desperately seeking fresh loans to replenish its banks’ capital. Much of the expected reduction of its debt would, therefore, be immediately voided. A cruel blow would also fall on Greek social security funds and small bondholders, with losses probably passing on to pensions and savings.”
This would be a false default designed to limit the cost to Greece’s foreign creditors while trying to pacify a restless public that might otherwise take matters into their own hands and force through more radical restructuring of the national debt. It wouldn’t be the debt forgiveness Greeks need in order to first reverse the austerity caused depression and then the rebuilding of the country that must follow.