http://www.theatlantic.com/business/archive/2011/12/first-lets-kill-all-the-creditors/249575/One of the provisions in the latest, er, provisional eurodeal, is that no matter what happens, no creditors other than those who lent to Greece will be forced to take a haircut on sovereign debt.
Felix Salmon is outraged:
'The impetus for this completely insane policy seems to have come from the ECB, which genuinely seems to believe that bailing in private-sector banks, in the Greece restructuring, was the "terrible mistake" which caused the current euro crisis. Talk about confusing cause and effect: it was Greece's fiscal disaster which caused the restructuring and the necessary bail-in.
To understand just how stupid this is, all you need to do is go back and read Michael Lewis'sIreland article. The fateful decision in Ireland was to take the insolvent banks and give them a blanket bailout, with the banks' creditors all getting 100 cents on the euro. That only served to put a positively evil debt burden onto the Irish people, forcing a massive austerity program and causing untold billions of euros in foregone growth, while bailing out lenders who deserved no such thing.
Are we really going to repeat -- on a much larger scale -- the very same mistake that Ireland made? Does no one in Europe realize that this is the single worst thing they can do?'
I find the outrage completely understandable--seriously? You want to cut pensions for low-income workers in order to bail out wealthy bondholders? At the same time, I wonder whether this is really the single worst thing they can do.