Solving The Greek Crisis The Fair Way
The weight of the 150-plus billion dollar debt accumulated by the Greek government and banks is more than this small but venerable country can bear. It’s more than the EU can bear too.
The unpopular, and obviously wrong, solution proposed by the IMF as well as the ECB involves draconian austerity measures which the Greeks will be forced to support. But it’s a very one-sided solution.
Nevertheless, a casual outsider might say that “if you borrow money, you have to pay it back – fair is fair.” But the reality of the situation is that the Greek PEOPLE didn’t borrow that money. Their GOVERNMENT and their BANKS did.
True, part of that has gone into the Greek economy and, arguably, benefited the Greek people. Perhaps 10%, tops.
THAT is the part that the Greek population should be able to agree that it should, morally, be their responsibility. They had the benefit from that money even if they themselves, directly, didn’t exactly ask for it.
So, here’s a simple (okay, simplistic!) solution which the Greek people would be much more likely to accept – and also benefit the world economy as a whole as a direct result:
Make a calculation of how much of the debt has actually directly benefited the population. Basic calculations make it hard to see how this amount could be much greater than €5-10Bn. Probably much less. Agree to be responsible for that, subject to a separate agreement regarding how exactly is that to be paid off and when.
As for the part which is unaccounted for or doesn’t represent anything other than spurious government/banking operations – that’s THEIR problem. The banks who took the risk and lost on their punt – should write off the bad debt. The government officials who authorized this and mismanaged the funds – should be personally responsible. Debtors’ prison sounds like a fair idea.
I realize that this will be seen as a gross over-simplification, but in this world of gross over-complications, one over-simplification would be a welcome change. It would also mark the beginning of the return of responsible capitalism, who knows.
And other countries could follow suit.
Who would win? The people and the countries in question, no doubt.
Who would lose? The criminal and/or the irresponsible elements within the respective governments. Specific individuals. And the banks? The banks wouldn’t lose anything other than minor operational costs. The “lost” money is, after all, fiat. From dust it came and to dust it returns.