can someone please explain why the banks are to blame for Greece

The_White_Horse

and not their massive unproductive public sector on huge wages, massive pensions with the ability to retire at 45???

This is the real reason for Greece's woes. They borrowed and now they can't afford to repay due to their general unproductiveness an inability to collect tax and a huge public sector burden.

how is this the banks' fault?

please explain.

Mallotum_X

Presumaby its the banks and the greek government at fault.

If i was lending billions of euros to someone, I'd do some basic checks if they could pay it back.

Generali

The_White_Horse wrote: »

and not their massive unproductive public sector on huge wages, massive pensions with the ability to retire at 45???

This is the real reason for Greece's woes. They borrowed and now they can't afford to repay due to their general unproductiveness an inability to collect tax and a huge public sector burden.

how is this the banks' fault?

please explain.

Because all woes are the fault of the [STRIKE]Gnomes of Zurich[/STRIKE] [STRIKE]Jews[/STRIKE] Bankers.

Did you know that Morgan Stanley invented AIDS in order to keep the price of silver artificially low? Also Jonathan Sacks (latterly Chef Rabbi) invented Goldman Sachs as a result of a schism in the Jewish Banking faith between the Rothschilds who wanted to poison wells and The Sackseses who wanted to cook and eat Gentile babies.

There's a thing on You Tube about it. I'll look it out for you.

Mallotum_X

Incidentally, why are you asking this one, pretty much all the covereage of this i have read has blamed the public spending in Greece, or are the Greek people now blaming the banks?

Quasar

The tango was danced by both: th Greeks built their economy on a house of cards, and the banks financed it. All that money the Greeks didn't really have came from somewhere, and chances are it was not from trees.

michaels

Well I believe it is all the banks fault - wasn't it our friends Goldmans who did some dodgy exotic trade with Greece allowing them to hide some of their debts and thus qualify for the Euro in the first place when they didn't actually meet the entrance criteria. Once in the Euro they were able to run up the massive debts which would not have been possible outside. QED

Of course the whole Euro thing was a political project from the start so the connivance was only there to allow the rest of Europe to turn a blind eye to the issue but even still, all the banks fault.

Mr_Mumble

michaels wrote: »

Well I believe it is all the banks fault - wasn't it our friends Goldmans who did some dodgy exotic trade with Greece allowing them to hide some of their debts and thus qualify for the Euro in the first place

The infamous Goldman interest rate swap was arranged in 2002 a year after Greece had entered the Euro so you can't blame GS for that! The swap gave the Greek government an extra 1 billion euros in debt or 0.278% of its total current debt burden. Even if you believe some evil banker forced the innocent Greeks into the trade its hardly a reason to blame bankers for Greece's current travails.

Risk magazine, who originally ran an exclusive on the deal back in 2003, responded to last year's Goldman bashing stories here:
edit: (try this link via google to get around the paywall issue).

http://www.risk.net/risk-magazine/news/1591633/greek-woes-revive-seven-goldman-swap-story

michaels

Seems to be subscriber only but anyway, why let the facts get in the way of a good story?! Didn't the Italians do the same thing?

Mr_Mumble wrote: »

The infamous Goldman interest rate swap was arranged in 2002 a year after Greece had entered the Euro so you can't blame GS for that! The swap gave the Greek government an extra 1 billion euros in debt or 0.278% of its total current debt burden. Even if you believe some evil banker forced the innocent Greeks into the trade its hardly a reason to blame bankers for Greece's current travails.

Risk magazine, who originally ran an exclusive on the deal back in 2003, responded to last year's Goldman bashing stories here:
http://www.risk.net/risk-magazine/news/1591633/greek-woes-revive-seven-goldman-swap-story

Mr_Mumble

michaels wrote: »

Seems to be subscriber only but anyway, why let the facts get in the way of a good story?! Didn't the Italians do the same thing?

Yep, JPMorgan and Italy which gives me an excuse to just c&p the beginning of the risk magazine story (darn these paywalls for highfalutin journals that only toffs can afford).

A Risk magazine article, written in 2003, has now been picked up by Bloomberg, BusinessWeek, City AM, Reuters, Reuters's Felix Salmon, the Financial Times and the Independent, among others. It outlines the swap transaction Goldman Sachs completed for Greece that is at the centre of today's controversy over the size of that nation's debt.

The Greek debt crisis has refocused attention on a controversial swap trade first reported by Risk in 2003. The deal, completed with Goldman Sachs in 2001, effectively allowed Greece to borrow roughly €1 billion without adding to its public debt figures. At the time, the scale of its borrowing was threatening to attract a fine from Brussels. The original Risk feature is available here.

There have been no new developments since then but, earlier this week, Germany's Der Spiegel revisited the issue, sparking widespread coverage by financial blogs – including those run by the New York Times, Reuters, the LA Times and the Financial Times. The story has provided commenters with fresh ammunition for their attacks on Goldman Sachs – even though the transaction was legal, common at the time, and widely marketed by a number of banks.

The real scandal, according to Gustavo Piga, an economics professor at the University of Rome, is that European authorities such as the European Central Bank (ECB) and Eurostat – which sets the reporting rules for European Union members – did nothing to shut down the practice after it was brought to their attention in 2001. "It's not at all clear to me why the European Commission, Eurostat and the ECB didn't want to deal with this. The issue was real, so if they were interested they would have done something about it," Piga says.

Piga drew attention to the subject with a 2001 paper describing how an anonymous country had used swaps provided by an unnamed bank to borrow money without disclosing it – the Financial Times subsequently revealed that the trade involved Italy and JP Morgan. But despite the heat generated by these revelations, little action was taken – something Piga believes raises serious questions

Loopgames

The_White_Horse wrote: »

and not their massive unproductive public sector on huge wages, massive pensions with the ability to retire at 45???

This is the real reason for Greece's woes. They borrowed and now they can't afford to repay due to their general unproductiveness an inability to collect tax and a huge public sector burden.

how is this the banks' fault?

please explain.

The reason is in your own post...."they borrowed.."...did you ask from who?

Bankers lending is the fundamental problem.


If you sell products to the public and make it readily available then those products haven't passed the health and safety checks ...who do you blame when accidents happen...the companies that make them.

Financial products are made available by BANKS...without checking affordability to who they sell them to..those are the failed safety checks and responsibility of banks.

michaels

I think the economist had this down as the greatest trade ever - for a small fee to do the trade, Italy got in to the Euro and paid less on all its borrowings for the following decade, saving may be 2-3% of GDP per year (100% debt/gdp ratio, assumption that Italy's govt borrowing would have cost 3% pa more it if had not been in the Euro)

Mr_Mumble wrote: »

Yep, JPMorgan and Italy which gives me an excuse to just c&p the beginning of the risk magazine story (darn these paywalls for highfalutin journals that only toffs can afford).