We read in the Guardian Business Blog:
The Wall Street Journal has today published new information which confirms what many observers and combatants in the eurozone crisis have long suspected ? that the 2010 bailout of Greece badly botched, contributing to the country’s subsequent woes.
With a third aid package for Greece looming, the WSJ has got its hands on a cache of documents marked “Secret” or “Strictly Confidential” which show how the International Monetary Fund struggled to tackle the Greek problem three years ago.
Crucially, the document shows that some IMF members were pushing for a debt write-offs in 2010 – something which finally happened in Greece’s second bailout, after Eurozone banks had the chance to offload their Greek bonds.
The 2010 documents show that several IMF directors were deeply skeptical of the staff’s economic projections from the beginning, calling them “rather optimistic,” “overly benign,” even “Panglossian.”, the WSJ reports.
And while the IMF presented a united face in public, there was pitched argument and dispute behind the scenes about the wisdom of the 2010 bailout plan — which forced tough austerity onto Greece in return for loans, but without tackling its overall debt pile.
and quote from the article:
“
The IMF documents show there were heated discussions about the need to write off part of Greece’s debt from the start. At the May 2010 meeting, directors from Middle Eastern, Asian and Latin American countries repeatedly asked why they weren’t being presented with the option.
European directors were “surprised” when Switzerland “forcefully” weighed in on the dissenting side, the minutes show. “Why has debt restructuring and the involvement of the private sector in the rescue package not been considered?” the Swiss executive director, Rene Weber, asked at the time.
The IMF says today that debt restructuring simply wasn’t feasible in 2010, because the risk of Greece’s financial turmoil spreading to other countries was so high.
Much of the debt was held by already fragile French and German banks, so European nations wouldn’t consider it. And the U.S. feared its own trillion-dollar exposure to European banks.
Ms. Lagarde was French finance minister at the time and keen to avoid losses by her country’s banks, which had lent heavily to Greece. Mr. Strauss-Kahn?widely known to be angling for the French presidency at the time?backed off a tentative effort to press the issue after encountering European opposition before the IMF meeting.
Back in June the IMF admitted that mistakes were made in 2010, when it published its own review of the bailout. These documents confirm it.”
That is the first evil. The subsequent evil is even worse. The Greek government steered by the dynamic duo of Stournaras and Samaras (with his extreme right wing acolytes), remains indifferent to this undoubted evidence. They pretend they have no idea. They carry on in complete subservience to German design. Which is, as Professor Varoufakis points out, to keep Greece in the Euro only because they fear the unravelling of this failed, disastrous project, BUT on the firm condition that Greece will be prohibited from achieving any kind of even moderate recovery.
But no, although the Greek government now has quite an arsenal of weaponry to hit back and do battle to shake this pernicious German designed policy off its back, it does absolutely nothing. Nothing at all other than press on with the malignant austerity that everybody by now knows will achieve nothing but catastrophe.
Why? Well it may be very simple, are they completely daft? No. Completely self interested. Yes. All they care about, in the spirit of Olli Rehn and others of that ilk, is to cling onto their overpaid jobs with all the perks and, no doubt, great opportunities, still, for graft.
In other times this Stournaras/Samaras behaviour would have been called by its proper name: treachery, treason rather and would be punished accordingly.
We should stop blaming Germany. She has only been acting in her own self interest as she perceives it*. But the Greek governments from Papandreou, through Papademos to the Stournaras/Samaras duo have been acting in the interests of foreign powers and destroying their own country completely and knowingly, as can no longer be refuted. This is a completely different matter.
*Even though Germany has been notorious for miscalculating what is in her own interest as she is currently doing, but that, dear readers, is another story.