Why the Greeks are Right to Riot

Lots of folks slamming the Greeks for being self-entitled, lazy, and so on for rioting over ‘austerity’ plans for their country. True, their country owes a mountain of debt. But why are the citizens of Greece paying the price for this while the banks are being bailed out (again)? Don’t banks have a responsibility to ascertain the ability of a borrower to repay? And if those banks make bad investments…why are others paying for it?

The usual argument is fear of economic collapse if the banks are allowed to fail, but that seems backwards. Rewarding incompetent or foolish investors harms the market. And how much truth is there to the bank failure fearmongering, anyway?

Look at it this way:

Imagine all the banks that loaned money to Greece are allowed to suffer the consequences of their bad decisions and some even go bankrupt:

• The average Greek will still owe, and be expected to pay, his or her mortgage, credit card debts, car loans, etc.
• The average Greek small and large businesses will still owe, and be expected to pay, their various loans, accounts payable, etc.

Goldman Sachs, which orchestrated a financial sleight of hand that enabled Greece to hide its extravagant ways.

Also aiding Greece’s debt habit were some of Europe’s biggest banks. By 2004 it was widely known that Greece had cooked its books and that its financial condition was not nearly as sound as advertised. Still, major banks like France’s giant BNP Paribas and Germany’s Commerzbank bought billions worth of the ill-fated bonds.

In other words, Europe’s big banks and pension funds bought Greek debt, ignoring the risks, because it was profitable.