Ahhh, the Greeks! Long considered the cradle of Western civilization, Greece is the birthplace of democracy, the founders of Western philosophical thought. The Greeks invented the Olympic Games, literature, political science, and too numerous too enumerate scientific and mathematical principles. The first coin was minted there, as was the university education, and the idea of theater and drama.

What they did not invent was Tragedy, but they are certainly embracing it today.

In that way, the Greeks are not so different than you or I. We Americans socialized the losses of our banks, while being so dumb as to leave the profits privatized. (The worst of both worlds!). Or the Irish, for that matter, who like us and the Greeks, were foolish enough to assume the bad debts of their reckless bankers.

Whenever you hear a Bailout being discussed, look to see who it is that is actually being bailed out. It is not the Greek people or even the Greek government — rather, it is the creditors of Greece. These are the banks mostly in Europe, primarily in Germany and France, but also includes Japan, China and the US.

Thus, it is no surprise that Greek people are rioting and the banks are rallying. They are the  beneficiaries of the Greek austerity, of the EU’s largesse, of the various rescue.

Greece has all sorts of problems, from their tax base to their economy. But the Greek people are savvy enough to know when they are being raped and pillaged. The media may not get it AT ALL, but the ones who seem to know the score are the rioters in the streets of Athens, Thessaloniki and Syntagma Square.

Greece! It is a shame there will be nothing left of you once the bankers finish picking over your bones . . .

>

UPDATE: June 30, 2011 3:50pm

Apparently Nobel Winner Joseph Stiglitz agrees: “The European Union is not rescuing Greece, but the German banks’ (El Pais.com)

Category: Bailouts, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

47 Responses to “Not the Greeks, But Their Creditors Get Bailed Out”

  1. arbitrage789 says:

    “Not the Greeks, But Their Creditors Are Bailed Out”

    ^^^^^^^^^^^^^^^^^^^^

    I think it’s hard to say that the Greek government workers won’t benefit from the European cash infusion, at least in the short run.

    (Not to suggest that the fundamental problem has been solved… it hasn’t).

  2. me says:

    Brilliant. And those rioters will be coming to a square near you sooner than later after the asshats in DC get done with us.

  3. - Insert pithy comment related to Greek culture that agrees with Barry here -

  4. Mike in Nola says:

    Charles Hugh Smith has a slightly different take which I think may be more correct in some respects. While the creditor banks are an obvious beneficiary of the bailouts, so are the rich non-taxpayers who will continue not to pay the increased taxes, continue to borrow Euros and won’t be particularly hurt by austerity because they don’t depend on government pensions, employment andd healthcare. It sounds like what the Republicans are pushing for here.

    http://charleshughsmith.blogspot.com/2011/06/greece-is-kleptocracy.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+google%2FRzFQ+%28oftwominds%29

  5. foosion says:

    Are you suggesting the Greek government should prefer the interests of its own citizens over the interests of foreign banks? What an utterly bizarre concept in today’s world.

  6. Moss says:

    The theme is always the same.
    Of the top 1%, by the top 1% for the top 1%.
    Kleptocracy, TBTF, QE, Corporate Welfare, Private gains/ Social losses, decriminalized fraud, Wealth Effect, Privatization. Need I go on………

  7. Robespierre says:

    @Barry

    “In that way, the Greeks are not so different than you or I. We Americans socialized the losses of our banks, while being so dumb as to leave the profits privatized.”

    Actually they are very different. We did nothing. They are rioting on the streets. They are the land of the brave and free. We are the land of Snooky, American idol and Big Macs.
    What the bankers bailout finally demonstrates, however, that world government of the ledt and right are equally own by the banking cartel. Now in the past I use to think that to be a “conspiracy theory” of the tin hat people. Now with the facts on the ground no so much

  8. ami_in_deutschland says:

    Actually, the Greeks DID invent tragedy. At least their tragedies are the oldest ones anyone knows about…

  9. NoKidding says:

    “But the Greek people can tell when they are being raped and pillaged .”

    Greece, Ireland, USA: democracy.

    With only 12 million in population, the Greeks should be able to replace a government with ease…

    …unless the collective will is not sure about the alternatives. Raped and pillaged vs. hard work and uncertain rewards?

  10. Petey Wheatstraw says:

    Banks protect their own the way royalty always has: by maintaining that it is their god-given right to sit above and rule over all others. To practice tyranny as a matter of whim. Even kings that hated and warred on each other were compelled to mutually support the underpinnings of monarchy — the idea of “royal” blood, the idea of entitlement.

    The only difference is that today’s banker kings rule across national borders and from behind the corporate screen. Their claimed virtue is that only they can create money (out of thin air, no less).

    If the sham that is central banking is threatened in Greece, no country’s central bank (or ruling class) is safe. The ruse is exposed. The people revolt. It spreads across borders.

    Did anyone seriously think that the status quo in Greece would be willingly resolved in favor of the common citizen or that anything short of mass revolt would overturn it?

  11. Darmah says:

    Barry may have pointed this out last year. It is quite good and worth the read.

    http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010

  12. Petey Wheatstraw says:

    Edit:

    If the shams that are central banking, debt-based economies, fiat currencies, and fractional reserve lending . . .

  13. Bob A says:

    i’m pretty liberal but i have a hard time sympathizing with people rioting because they might have to actually pay taxes and won’t be able to retire at 50…

  14. RW says:

    Like most elites these days, the Greek leadership seems more interested in remaining respectable than in the fortunes of their citizens, but the continuing debacle does limn one of the more substantive differences between Lemon Socialism and the real article: only 1% of the population gains by the former, the other 99% tend to do better in the latter; cf. http://tinyurl.com/44rr8fc

  15. I have been very critical of the Greek culture of profligacy, I’ve called Greece a nation of tax scofflaws and cheats. And I have little dout that Greece cheated to get into the EU.

    But that does not mean you throw the nation to the wolves!

    These are two different issues

  16. kevin r says:

    People hate change. More than anything, the fear of the unknown drives the majority. Even so, Greek popular opinion has been slowly losing faith that austerity will keep things the same. It is not there yet, but give it another year and they may decide the unknow cannot be worse than what they have. Of course, in the old days, that would precipitate a visit from the creditor’s standing army. Not sure what the equivalent would be today, although France has been flexing it muscle a lot lately (see Libya, Ivory Coast).

  17. mariaC says:

    @ Robespierre Actually they are very different. We did nothing. They are rioting on the streets. They are the land of the brave and free. We are the land of Snooky, American idol and Big Macs.
    What the bankers bailout finally demonstrates, however, that world government of the ledt and right are equally own by the banking cartel. Now in the past I use to think that to be a “conspiracy theory” of the tin hat people. Now with the facts on the ground no so much

    Yes, true we are different. We are out on the streets and we until we get all our rights. We won’t give up.

  18. yuan says:

    “they might have to actually pay taxes and won’t be able to retire at 50″

    lets just make up facts to support our political beliefs shall we…

  19. KidDynamite says:

    obviously, the US bailouts were similar – they were “necessary” because we couldn’t afford the pain of letting the creditors of the banks take the pain they should have taken.

  20. mariaC says:

    @Bob A i’m pretty liberal but i have a hard time sympathizing with people rioting because they might have to actually pay taxes and won’t be able to retire at 50…

    Actually my Greek father was retired at 67 and his pension is the” huge” amount of 450€ or 649.13$ after 45 years of hard work.
    He always paid his taxes but now they asked more and more.

  21. DrungoHazewood says:

    There is a big misconception about Greece. Of course the media doesn’t want you to sympathize with them, but they are under far more economic stress than we are. They don’t retire at 50 with full pensions, in fact the early retirement is 54 and its not a full pension. A full pension isn’t even enough to live on. Right now there are people in their 70s and 80s , that retired in their 60s after decades of service, trying to live on 450 euros a month. That doesn’t even buy cat food. And you can imagine what the health care system is like as it wasn’t all that good before this crap started. The kleptocracy is for the little guy when OPM is on the line, but when they might have to take a hit, they slander and lie to make it the other guys fault. Sure the Greeks aren’t the most dynamic people in the World, but right now dogs are getting better treatment. And yes one day it will be our turn, but we have no concept of how the Greeks are being run roughshod.

  22. smedleyb says:

    Oh Barry, wrong again.

    The Greeks did invent tragedy!

    We still love and read you.

  23. gd says:

    “i’m pretty liberal but i have a hard time sympathizing with people rioting because they might have to actually pay taxes and won’t be able to retire at 50…”

    And as a pretty liberal, you clearly aren’t retired US military. Because they get that and socialized medicine.

  24. DrungoHazewood says:

    Petey,

    You know the score. Suddenly, someone who under other circumstances would be a deserving welfare recipient, is a criminal when the Royal’s money is at stake.

  25. Mike in Nola says:

    On Greek laziness, I recently saw figures, OECD I think, indicating that Greeks worked more hours than almost anyone else in the EU, including the industrious, self-righteous Germans.

    There was also another figure showing that Greeks on average actually worked past 60. Don’t remember the exact date.

    The denigrating of Greek workers by the EU elite and the parroting MSM follows the patterns of exploiters from Southern plantation owners to Nazis who realized that it was much easier and less guilt inducing to demean those whom you intend to mistreat.

  26. smedleyb says:

    Did the Germans ever pay their reparations for devastating Greece in WW2?

    Did they ever pay any of their reparations at all?

    Yeah, didn’t think so.

  27. Francois says:

    Robespierre wrote:

    “They are the land of the brave and free. ”

    And we are the land of the slave and fees. Even worse, we seem to enjoy it so much, that in 2010, we elected a House majority that wants to impose more of it on us.

    Is we totally FUBAR or what?

  28. [...] Ritholtz of The Big Picture has one of the best blogs about the economy and finance out there. Here is an example of the sort of straight-up stuff he posts (hard to believe he works in the industry [...]

  29. Stochos says:

    This is Western history of the world at it worst, civilisation was NOT created in the West :

    ‘Long considered the cradle of Western civilization, Greece is the birthplace of democracy, the founders of Western philosophical thought. The Greeks invented the Olympic Games, literature, political science, and too numerous too enumerate scientific and mathematical principles. The first coin was minted there, as was the university education, and the idea of theater and drama.’

    All of the above was done in India long before it was done in Greece. How else does one explain that India (and China) were the richest in the world. (Angus Madison)

    ~~~

    BR: Hence the modifier “Western”

  30. TrickStyle says:

    You’re out of your element, Donny.

    Cry me a river.

  31. wildebeest says:

    The Greek military should step in an oust the government and impose a haircut on the creditors. Ditto the Spanish military if and when it comes to it.

  32. Kezume says:

    At the end of the day, their government spent more money than they had, and people were getting benefits (whether in the form of pensions, higher wages, or what have you) that they couldn’t afford. If the Greek people had stopped things before they got worse, maybe they wouldn’t be where they are now–they should have been out protesting the low to non-existent tax rates on the wealthy and/or the absurd deficit spending while there was still time for it to matter.

    ~~~

    BR: The first half of what you wrote is true, the second half is unsupported speculation, and yet you still manage to avoid the question at hand: WHO IS THE BENEFICIARY OF THE BAILOUT?

  33. CitizenWhy says:

    Mike in Nola’s comment is exactly on the mark.

  34. Kezume says:

    I did qualify the second half with a “maybe”–I certainly don’t deny that it’s speculation. I didn’t intend to avoid the question, since broadly I agree with your conclusion. The creditors clearly benefit the most. They made a bad investment, and I think they should take it on the chin instead of being made whole at the expense of, ultimately, the taxpayers from a variety of countries. (Ditto that for the parties bailed out in our own mess in the US.)

    Perhaps this is implied by your post, but do you think the people of Greece and the Greek government would be better in the long term if they simply defaulted and picked up the pieces and moved on instead of accepting this bailout? I don’t pretend to have the answer to that question. I do think they receive -some- benefit from the bailout–whether from the increased stability of their country or simply lower interest rates (relatively) on future borrowing. But the cost of those benefits is surely being borne unequally by those on the bottom rungs of the socioeconomic ladder.

  35. Mike in Nola says:

    Here’s the annual hours worked info I mentioned. Thought I had posted the link. You can re-sort the table by clicking on the headers of the column.

    http://stats.oecd.org/Index.aspx?DataSetCode=ANHRS

    BTW: There seems to be some assumption by some people that the Greek man on the street borrowed all this money and should now be made to pay it back. They, no doubt, benefited from those loans. But the loans were made to the wealthy wheelers and dealers: bankers, the governement, etc and the money trickled down to the working classes. It’s like saying that the constructions workers who built houses during our bubble personally borrowed the money that paid their wages; they simply wound up with some that fell out of the pockets of the rich borrowers.

    BTW2: this discussion brought to mind our visit to London during the depths of the the collapse, allowed by $400 roundtrip non-stop BA flights from Houston. I suppose that was 2009. What struck me was that London was overrun with Italians. I kept wondering how they could all afford one of the the more expensive cities in the world. Our tiny room at the Vancouver Suites (which I recommend) had twin beds and a shower you could barely turn around in; it was $150/night. Of course, this was the result of the miracle of the Euro, a strong currency which was freely lent to the less well off countries at interest rates kept unrealistically low by the ECB to allow the purchase of German goods. That these ordinary people didn’t figure out that this was all unsustainable is not their fault; I’ve heard of some Princeton economists who apparently missed it also.

  36. Mike in Nola says:

    Just found retirement age figures. There’s a spreadsheet you can download. Shows average retirement in Greece is over 60. A bit less than the US, but older than the wonderfully industrious Germans.

    http://www.oecd.org/document/54/0,3746,en_2649_34747_39371887_1_1_1_1,00.html

  37. Ither says:

    Not a numismatist, but I think that the Lydians invented coinage, not the Greeks.

  38. [...] Barry Ritholtz, “Whenever you hear a Bailout being discussed, look to see who it is that is actually being bailed out.”  (Big Picture) [...]

  39. beaufou says:

    The prime minister was making a speech about saving citizens in the parliament while the citizens were throwing rocks outside to stop the vote, what a joke.
    Bleeding the ordinary man to pay back some entity that never had the money in the first place.

    Good posts Mike.

  40. [...] “Loan Origination Fraud” needs to be better understood. As we noted yesterday, bailouts go to the incompetent bankers. Whether bankers are foolishly giving credit to home buyers (and ignoring their lack of incomes), [...]

  41. [...] Not the Greeks, But Their Creditors Get Bailed Out [...]

  42. Darkness says:

    > These are two different issues

    Which makes Italy a more straightforward case study. Less poster-boy socialism to use against the populace, plenty of economic activity, simply a lack of will and excessive corruption to collect sufficient taxes. I think Italy is benefiting from staying out of the limelight. And they have, so far, been smart enough to target and publicize the tax crackdown on the very very wealthy first.

    Scary thing, the paranoids who rant about the plot to drive sovereigns into debt crisis so they can swoop in and buy up state assets cheap are starting to sound reasonable.

  43. Schnormal says:

    A big NAI (“yes”) to Mike in Nola.

    US citizens believe our country is TBTF. Greeks know theirs is not —
    http://en.wikipedia.org/wiki/Greek_military_junta_of_1967%E2%80%931974

  44. DeDude says:

    It is clear that sooner or later they will default. However, if it happens later then the banksters will have time to bail out of their malinvestments in that country and transfer the debt (that we all know will default) to governments and international organizations funded by governments. As an added bonus the banksters get to purchase Greek assets at firesale prices.

  45. [...] via Not the Greeks, But Their Creditors Get Bailed Out | The Big Picture. [...]

  46. Greg0658 says:

    “banksters get to purchase Greek assets at firesale prices”
    .. more TBP – chip’sters get to legally snag world assets at firesale chip prices

    hey you beavers stop building dams – starving my critters of water :-( eventually the water is gonna flow again – and the animals will return :-| happy days are here again :-) wash rinse repeat

  47. [...] first, and shorter piece, was from the Big Picture blog and looks at who will actually benefit from the bailout, which has [...]