Europeans aren't bailing out Greece, they're bailing out banks

[CHIMO]

The euro zone’s 17 members are currently voting on a larger, more powerful, bailout fund: the European Financial Stability Fund. Officials want €440-billion for the kitty, with new powers to buy European government bonds and invest directly in banks. The goal is to enhance the confidence of financiers in euro zone bonds and banks – countering speculative attacks that have pushed up interest rates and shaken confidence. All members must approve the expansion, likely by mid-October.

The expansion, however, has sparked lots of public grumbling: “Why should taxpayers in countries that followed the rules bail out countries that didn’t?” This sentiment won’t stop any country from approving the expansion (Germany, the linchpin, endorsed it last week). But it will constrain politicians’ subsequent efforts to rein in the crisis.

The public’s ire, while understandable, is misdirected. It isn’t Greece and other weak states being bailed out. It’s the banks that lent money to those countries. If it were only about letting Greece default, that would have happened two years ago. It’s the feared collapse of banks in France, Germany and elsewhere – causing a credit freeze and continental depression – that officials are racing to prevent.

So German taxpayers aren’t bailing out big-spending Greeks. They’re bailing out German banks (and, more precisely, the financial investors who own those banks). Those banks created leveraged credit out of thin air, worth many times their actual capital, and lent it to Greece. They will now fail when Greece doesn’t pay it back.

http://www.theglobeandmail.com/news/opinions/opinion/europeans-arent-bailing-out-greece-theyre-bailing-out-banks/article2189592/

[saras]

1. Why don't they fucking weed out the speculators instead of catering to them?

[bossy22]

2. there is nothing inherently wrong with speculating

speculation is just an investment that is deemed risky- so infact, you can say that the entire greek debt purchase by banks (which was pushed by the euro govts btw) was speculative at best.

I think this legislation is exactly what the Eurozone needs, TARP saved us from a depression and hopefully the EFSF can do the same for them

[JDPriestly]

3. The banks should share in the loss.

The bail-out here helped the banks but depressed the real economy. It has not worked at all in my opinion.

The banks should get some bail-out money but they should take big losses. The banks goofed in the way they made the loans. I believe that the borrowers took the money in good faith. The banks should have known better. So, I do not trust that the bankers loaned the money in good faith. I think the bankers loaned it in order to take big bonuses up front. I don't know, but I suspect they made the loans for the very short-term profits they could make on them and did not consider whether the loans could realistically be paid back.

That is, at least, very true with regard to the mortgage loans here in the US.

[PassingFair]

4. "...and did not consider whether the loans could realistically be paid back."

I think they DID "consider" that.

They KNEW they couldn't be paid back.

They simply didn't care.

There was money up for grabs, and in
their minds, someone else would take
it if they didn't.

It's not illegal unless you get caught.
It's not illegal if everyone else is doing it.

This is the world we're living in.

:puke:

[bossy22]

5. I do agree

The banks need to take some of a hit but you have to stabilize them first.

Though i think the bail out actually helped the economy- imagine this country with 4 of its largest banks going into bankruptcy- our unemployment would probably closer to 20% and we would still be going through the bankruptcy court proceedings. A collapse of the financial system would bring down the entire economy

[tama]

7. I have no patience

for the oppressive attitude that you represent. People need to eat, not spend what they got on essentials with speculated prices. Nothing but contempt for your lack of sympathy with your sisters and brothers.

[tortoise1956]

8. I don't understand your anger

The poster said nothing that indicated a lack of sympathy for anyone. It was simply an expression of the fact that pretty much anything having to do with investing for the future is speculating. That is absolutely true. When I put money into my 401(K), I'm betting that the account will grow into something that will help me during my retirement. As we have seen recently, that isn't a sure thing. The same with the small stock portfolio I inherited when my mother the schoolteacher died, or the $1k I put into Fannie Mae and Freddie Mac. All of these have lost value in the past 3 years. Does this mean that I am an evil speculator?

[tama]

9. When speculators speculate

- just out of monetary greed - e.g. on food prices, that means other people die of hunger - and violence when they riot. Nothing inherently wrong in speculation?

People have potential to be many things and behave many ways. I don't believe in personal quilt tripping. But I do believe that money as we know it is inherently evil and makes people behave badly.

[tama]

6. Not Europeans

just the 1% of banksters and the corrupt politicians in their pocket, the elite. People are sick and tired and allreayd fighting and waking up to the fight. European governements do not represent the people.