Default as a game
Default in the eurozone as a game of cards.
Default in the eurozone as a game of cards
Everyone, without a single exception and regardless of public utterances, knows the Greek debt burden is unsustainable. Greek debt is impossible to service for clear economic and political reasons. So what is underway this past year-and- a -half in the eurozone is typical Mountzouris, a card game in which the loser gets stuck with the wrong card in the final round. The question is who will be the unfortunate holder of Greek bonds when the time is up. There are three main players. Banks and bondholders who chose to invest in the toxic bonds, European taxpayers forking out the loans that have helped pay the first players, and Greek taxpayers, who were the initial holders of Mountzouris, but who aren’t supposed to collapse under the burden, because then they ‘ ll be tempted to get rid of the first player, and may be of the second one as well.
The players/lenders (banks and bondholders) possess two basic advantages but also a great vulnerability. The first ace up their sleeve is the complexity of the global financial markets, in whose veins runs a mythical all-powerfull substance called “market trust”. Its effectiveness is maximized when accompanied by the usual “Remember Lehman Brothers” lines. Their second advantage is the ill- conceived eurozone architecture, which , when difficulty struck ,proved to be far from a “optimal currency area”,not to mention anything that could even vaguely remind of a United States of Europe. In the common European house, capital and elites move freely to wherever profit calls, while plenty of others can barely step out of their drab national cellars. The lenders, however, are also faced with a fundamental problem, one that gives them nightmares and makes them wake up in the morning with a strong urge to sell. Their problem is called DEMOCRACY.
Banks and bondholders know full well that there will never be an electorate willing to suffer long term external tutelage and crushing austerity just to pay its international players/creditors. Sooner or later, especially if the questionable recipies succeed and the suffering leads to a primary surplus, the country will try to get rid of the unfair and unequally distributed burden and get a grasp of the situation. The paradox is that, no matter whether the austerity measures succeed or fail, the lenders know that they will lose most of their money. That s why, after using blackmail in order to postpone default, they will do their best to shift the burden of their bonds to the purportedly robust backs of other European taxpayers. Toxic paper in hand, European governments will then try themselves to squeeze whatever they can out of the Greeks or at least to appease their angry electorates by inventing helpful scapegoats.
Who would have expected how interesting Mountzouris can be…
H.B.
Everyone, without a single exception and regardless of public utterances, knows the Greek debt burden is unsustainable. Greek debt is impossible to service for clear economic and political reasons. So what is underway this past year-and- a -half in the eurozone is typical Mountzouris, a card game in which the loser gets stuck with the wrong card in the final round. The question is who will be the unfortunate holder of Greek bonds when the time is up. There are three main players. Banks and bondholders who chose to invest in the toxic bonds, European taxpayers forking out the loans that have helped pay the first players, and Greek taxpayers, who were the initial holders of Mountzouris, but who aren’t supposed to collapse under the burden, because then they ‘ ll be tempted to get rid of the first player, and may be of the second one as well.
The players/lenders (banks and bondholders) possess two basic advantages but also a great vulnerability. The first ace up their sleeve is the complexity of the global financial markets, in whose veins runs a mythical all-powerfull substance called “market trust”. Its effectiveness is maximized when accompanied by the usual “Remember Lehman Brothers” lines. Their second advantage is the ill- conceived eurozone architecture, which , when difficulty struck ,proved to be far from a “optimal currency area”,not to mention anything that could even vaguely remind of a United States of Europe. In the common European house, capital and elites move freely to wherever profit calls, while plenty of others can barely step out of their drab national cellars. The lenders, however, are also faced with a fundamental problem, one that gives them nightmares and makes them wake up in the morning with a strong urge to sell. Their problem is called DEMOCRACY.
Banks and bondholders know full well that there will never be an electorate willing to suffer long term external tutelage and crushing austerity just to pay its international players/creditors. Sooner or later, especially if the questionable recipies succeed and the suffering leads to a primary surplus, the country will try to get rid of the unfair and unequally distributed burden and get a grasp of the situation. The paradox is that, no matter whether the austerity measures succeed or fail, the lenders know that they will lose most of their money. That s why, after using blackmail in order to postpone default, they will do their best to shift the burden of their bonds to the purportedly robust backs of other European taxpayers. Toxic paper in hand, European governments will then try themselves to squeeze whatever they can out of the Greeks or at least to appease their angry electorates by inventing helpful scapegoats.
Who would have expected how interesting Mountzouris can be…
H.B.