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Comment by pooper | Hacker News Reader

Is Greece willing to say that it does not back decisions and agreements made by the previous government? How can anyone trust they won't do the same when this government bows out? Greece will lose all credibility in the international market if it keeps playing victim.

No, the debts will not go away. Everyone loves to crap on big banks but in this case Greece owes money to EU nations.

Unrelated side note: Bringing up the second world war makes Greece sound even more petty. What's wrong with you people?

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> Greece owes money to EU nations

Only because the private debts were nationalized in the last bailout round, which was basically a joint bailout of Greece's public finances and German/French banks, all of which were on the brink of insolvency. The bonds were previously mostly held by French and German banks, and the agreement did two things: 1) Greece was given a big chunk of money on the condition that most of it be sent back north to pay off a portion of their bonds; and 2) much of the remaining bad debt was shifted to public books, in the process being restructured with more generous terms. Greece has a large part of the fault in this whole saga, but they are not the only reason these originally privately held debts have now ended up on public books.

I do think from a realpolitik perspective Greece is playing hardball at the wrong time: they had a much stronger negotiating position in 2010 than they do now, when much of the "contagion" problem has been contained. But the government at the time stupidly agreed to a set of terms that solved the German/French problem while containing but not solving the Greek problem. Few serious economists at the time believed the package was a workable one for Greece, unless you thought some extremely optimistic projects of Greek GDP growth were realistic; it was seen as at best kicking the can down the road. But by 2015 when Greeks realized that and voted in a government willing to play hardball, they are no longer in a good negotiating position.

I don't think Greece is playing hardball. I think the game is "chicken": everybody involved knows that Greece cannot and will not pay back that money and will leave the Euro. But both sides want to avoid being the first mover: both want the other side to make the first move and admit that Greece is bankrupt.

Syriza wants to be forced out of the Euro so they can continue to play the xenophobic game and blame Europe, or rather Germany. The rest of the EU wants Greece to decide to leave, so they don't have to go to their voters and say "we tried everything, they didn't want help ..." and avoid admitting that the critics of the bailout were right all along.

In this game, time is on Greece's side, because as long as nobody blinks, all that sweet EU money is still raining down on Athens.

There are many layers here, as I see it sitting in a northern european non-eurozone country:

Moving bankers bad investments onto public books is a monumentally poor decision for everyone, and the effects of the decision should be undone.

However, if France and Germany have no appetite for holding their bankers responsible for their poor investments, and if they can honestly convince their citizens to pay for the bankers poor investments, then that is a (poor) decision they can make (and have so far made). The better decision is to require repayment of bonusses, let the losses materially affect banks shareprices, and let bank-shareholders lawsuits handle the rest.

On the other side, pushing the financial burden of a bankers bailout onto the greeks is counterproductive to everyone (who is not a banker) in the eurozone, and is morally disgusting.

Are you not in effect saying: never pay back debt at all? For whenever you don't pay back debt, then it's the lender's fault, nobody forced them to lend, it's their own risk.

While this is a consistent position that has historically been held by some, it's incompatible with any modern economy. In particular it is incompatible with the modern concepts of old-age pension, health insurance, unemployment insurance etc.

No - as a citizen I'm saying. Don't let bankers buy risky papers to a degree that they cannot cover their own losses.

The german and french bankers should not have bought greek government bonds at the prices they did considering the greek levels of public debt.

Why do you keep talking about German and French banks only? As Atropos pointed out, Greek banks had the highest exposure. German banks had quite a low exposure. In the light of this (and the power structure of the EU/ECB) the German taxpayer is bailing out French and Greek banks.

Anyway, what is deemed risky is highly subjective and easy to see only in hindsight.

Because democratically, the foreign debt-relation makes the whole difference. If all of the greek debt had been domestic, then a restructuring would have been a purely domestic matter - solvable by a democratic election.

What is ugly is when foreign states impose non-sensical demands of another country as part of a move to bail out their own banks.

I'm not sure I see your point. Greece has a perfectly democratic way of getting rid of its debt: default. Russia in 1998 was the last big European country to do so. Iceland's banks also defaulted on some wholesale depositors a few years ago. Greece has (partly or fully) defaulted on foreign debt already on several occasions in the past. Greece has in effect already defaulted on some of its current debt, although it is not always called a default. Moreover Greece is getting extremely favourable interest rates and repayment schedules on its remaining debt.

The real question is: why is Greece not going the democratic way of defaulting on its external debt? And the answer is, as you know well, that Greece wants to continue receiving all that sweet EU money. Why stop a good thing?

    ... impose non-sensical demands ...

Have you considered that not everybody thinks that fighting corruption, tax-avoidance etc is non-sensical?

Agreed. However, once again, we should not compare directly solutions of Iceland (banks) and Greece (government), because the problems are quite different.

Iceland (the country, the government) was not in much debt and did not default. Icelandic banks did default and went bankrupt. The banks (Kaupthing, Glitnir and Landsbank) were split so that Icelandic debts and assets were moved into new surviving publicly owned domestic versions of the banks, and the foreign remnants of the banks were placed into receivership and liquidation.

Russia, the country, actually defaulted. Russia is today not known as a safe place for investments (though the history of a default is just a small part there; in Russia's assets, it has huge energy reserves, and in its liabilities, it has kleptocracy, corruption and an arbitrary justice system).

Sure, but it's a tried and tested way of getting rid of one's debt. Many (most?) countries have used it in the past, see [1], including the USA.

[1] https://en.wikipedia.org/wiki/Sovereign_default#List_of_sove...

"Moving bankers bad investments onto public books is a monumentally poor decision for everyone"

It's a great decision for the banks, and the politicians that got their cut. It's (only) a bad decision for you and me, the tax payers, who are being raped.

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