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Home Publications Blogs Beat the Press Bailing Out Greece Bails Out German Banks

Bailing Out Greece Bails Out German Banks

Monday, 03 May 2010 04:14
This piece of information should have been included in a Washington Post article on the European-IMF bailout plan for Greece. At one point the article quotes from a German newspaper editorial: "most Germans struggle to understand why they should be paying for the Greeks, who are broke because they squandered their money." It would have been helpful to point out to readers that this money is allowing Greece to continue to make payments to foreign creditors, a list which includes German banks. In other words, the money going from Germany to Greece is in part money going from German taxpayers to German banks. This fact should have been noted in the article.
Comments (8)Add Comment
written by purple, May 03, 2010 7:15
The debt crisis will probably be a way for the ECB to forcibly erode state sovereignty and strengthen the power of 'Brussels'.
The French portion ($75 billion) dominates the German portion of $45 billion.
written by AndrewDover, May 03, 2010 8:02

As can be seen in:

written by Thomas Dooley, May 03, 2010 9:06
Why is it that 'bailing out Greece' apparently has nothing to do with helping the people who live in Greece? According to this article the problem that needs to be addressed is "investor confidence." In fact the people of Greece need to be made to suffer not be helped. They need to give up their pensions, forego social spending, and pay higher taxes because doing so will "restore investor confidence."

That's nice. I'm happy the state of mind of faceless distant investors will improve, but what about the people who live in Greece? Shouldn't the Greek bailouts help them in some way? Or is calling this a Greek bailout more like giving it a brand name sort of like all the brand names under the Proctor & Gamble Corporation? Whether you call it a Greek bailout in Europe or a Bank bailout here in the US it's really all the same transfer of money and it's all going to basically the same investors who all seem to share that same woeful problem with their confidence. We'd all be better off if these guys went to see a shrink instead. This giving them money, then more money, then even more money, doesn't seem to be helping.

As a matter of fact. Maybe it's time to just get rid of the investors altogether. Their needy physiological problems are going to be the ruin of us all. We can think about letting them back when their confidence improves. Sorry to be so hard hearted, but enough is enough don't you think?
written by skeptonomist, May 03, 2010 9:31
Krugman has several times referred to the necessity of "reducing labor costs" in the troubled countries, as if this had nothing to do with the well-being of the inhabitants.
written by fuller schmidt, May 03, 2010 10:08
I guess it would depend on the meaning of well-being.
written by AbqMike, May 03, 2010 10:27
"We'd all be better off if these guys [investors" went to see a shrink instead." LOL. Very funny, Thomas Dooley, but your critique is spot on.

Not your probably facetious point that maybe we'd be better off without investors ... we certainly need investors. The point is --- as Dean's post notes --- that the MSM and most others rarely address the fact that bailouts of countries, companies, etc. are also bailouts of banks and other investors, and thus avoid discussing the wisdom and consequences of such actions.
written by diesel, May 03, 2010 11:02
Here we go again.

Nation takes on debt load during world-wide boom which morphs into monetary blackhole in ensuing contraction. Has trouble finding creditors to refinance or rollover unserviceable level of debt. Default imminent. IMF reccommends bleeding the patient to purge evil vapors of excessive government spending and debt. Prescribes reducing government payroll, pension and selling off government-run industries and assests. That old familiar refrain.

Why are we always seemingly taken by surprise by all this? If there is one thing any of us should have learned in college, it is that virtually every phenomenon we shall encounter in this life resembles a sine wave. We breathe in, we breathe out. Our heart has an expansion phase followed by a contraction phase. All electromagnetic phenomenon, from light to radio, x-rays and deadly gamma rays come to us via sine waves. There is a plus pulse above the axis followed by its mirror image below the axis. Why can't we humans seem to assimilate this knowledge and act with some foresight so as to dampen the extremes? Instead we lurch from crisis to crisis. Recessions and good-times follow on one-another's heels like cold and warm fronts, high and low cells rolling accross the continent. And we're always blindsided! "Who could have known?" our revered witch doctors ask in bewilderment. What the hell's wrong with us that we can't learn to time our regulatory effort in synch with the larger rhythm?

That's what the meaning of Tao is, you know. It's the harmonious merging of our human cycle with Nature's cycle. The result is analogous to the moire pattern observed when two screens are visually superimposed. A resultant pattern emerges that retains the originals yet is something new. To understand this and to be able to effectively implement it is to be wise. Cleverness, on the other hand, is the ability to manipulate it for one's own advantage. We reward cleverness lavishly and adorn her in sparkling gems and designer-cut dresses, but allow her superior sister, wisdom to be clothed in rags.
written by JBG, May 03, 2010 3:48
"In other words, the money going from Germany to Greece is in part money going from German taxpayers to German banks. This fact should have been noted in the [Post] article."

Even more to the point, it should have been noted in the German editorial.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.