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Comment by sonnyblarney | Hacker News Reader

Yes, I agree with that, however, their dogma is reasonable.

And no the Greeks destroyed their own economy though systematic hard and soft corruption, knowingly hiding irregularities, unwillingness to make any necessary reforms, etc. etc..

The IMF's 'dogma' operates under the assumption that there are conscientious, reasonable and rational actors on the other side of the loan.

One might argue that it is this assumption that needs to be revisited ... though what some lament as 'austerity' (required by lenders) to others simply is 'being responsible with the massive loan we are about to take'.

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The fact that the Greek state is incompetent or corrupt was not unknown before the crisis. The banks granted loans to Greece knowing that the Greek state was incapable of paying back because they were certain that ECB (or EU) would guarantee their loans.

If you are assigning moral faults, then please do so for the banks too who made their loans knowing the facts & assuming that they would be bailed out by EU if things went bad.

A more rational thing to do would have been to force the banks to grant Greece a debt haircut, waiving off 50% of the loans, while helping Greece restructure its economy in a realistic manner.

Instead, many people especially at the EU saw the Greek economic problems as a moral failure of all the Greek people for which all of them, including pensioners, must be punished while safely bailing out the banks that originally lent. Somehow, it is unacceptable to blame the banks.

Not only that, but the average (Greek or not) person has no grasp of even basic economic policy, and can't see farther than "I have a job that pays well, so what if all the politicians are corrupt? It's not like I can do anything about that anyway".

The average Greek is in on the scam by not paying any taxes, or expecting to retire with full pension earlier than Germans do and voting out anyone who considers changing this. It's a problem from top to bottom.

"because they were certain that ECB (or EU) would guarantee their loans."

I doubt this. The ECB and EU have not ever done this, and thinking through it just for a minute means that this is highly unlikely. I can't fathom why anyone would actually think this is going to happen with any degree of certainty. But I get the impetus that 'way back in the 2000's' that people might have 'felt this way'.

Also - there's a lot of fault still on the side of the Greeks in this case.

Who exactly would force banks to grant Greece a debt haircut? And what would stop every other indebted nation from demanding the same deal?

A certain EU country exports it’s supposed tax revenue to Greece so they can use 90% of it to pay their multinational banks. They have to do it in a currency they don’t own and is overvalued relative to their economy. The country mostly pressing for this is meanwhile running an export surplus and apparently asking the same for every economy in the region. This is not sensible economics any way you slice it.

It’s happened before in history and even has a name: debt bondage.

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