Now, I wasn’t going to comment on this before something new actually happened and the fake Greece will abandon EU rumors that dropped the euro do not qualify.
But then came Jean-Claude Trichet and said the following:
“We have a programme, approved by the international community, approved by the IMF board, the entire world, approved by the European [Union], approved and financed by the IMF and the European [Union].
First of all, the Greece bailout was NOT APPROVED BY THE ENTIRE WORLD. See here, I was against it. I certainly was not the only one. Isn’t it strange that those in favor of the bailout and the very same people who could not foresee the recession even when we were in it and those that did foresee the recession once again understand that the bailouts will not help Greece. To be honest, this time it is very easy because the bailout are not even meant to help Greece, but the creditor banks of Greece.
Secondly, the bailouts are not financed by the IMF and the European Union but by the taxpayers. This might seem like a unnecessary remark but trust me when I say this, they avoid using the term taxpayer on purpose.
To recap my position:
The Greece bailout by the IMF and the EFSF and financed by the taxpayers was planned to do one thing and one thing only, transfer the losses incurred by Greece’s creditor banks onto the balance sheets’ of the taxpayers. There is only one winner from the Greece bailout and that is the former creditor banks. The people of Greece can always default on their debt. It is complete nonsense to claim that sovereign debt cannot be defaulted on. If this was the case, Greece debt would not be trading at half of its nominal value. If they do choose to default it is not going to be pretty as most of the debt is held by local pension funds and households. But consider the alternative, are they just going to keep paying larger share of their nation’s output as interest.
At least the following goals will be “achieved”:
- Bank shareholders will win
- Bank debtholders will win
- Bank executives will win
- The upcoming depression will be postponed
- Taxpayers from EU and US will lose
- Bailout nations will lose much of their sovereignty
And a free advice to Greece:
An idea has started circulating that Greece should put up collateral in exchange of further bailout loans. This is something I demanded as a citizen of Finland, but according to our finance minister Katainen there was no time to think about collateral. Under no circumstances should you pledge collateral because you have all the cards.