On Greek debt

Greek government debt is not really a problem for the Greek people so much as for overseas creditors, primarily banks and their shareholders. If there is a bailout it will largely benefit not the Greek people, but the greying populations of Northern Europe who, through their pension funds, own the banks that are most vulnerable to a Greek default.

Furthermore, the sums spent shoring up banks around the world in the last year or so (and many years earlier in Japan) can be seen in much the same light: as a vast subsidy by the undercapitalised young of the industrial world of the old and wealthy.

So, let’s be clear. The vast sums being spent on preventing insolvent financial institutions from collapsing are not primarily about saving capitalism and are only tangentially about preserving the obscene bonuses of useless bankers; it is largely a form of warfare waged for the benefit of the aged populations of the industrial world at the expense of their own children, in order to allow them to retire in comfort.

What makes the Greek situation interesting is that intergenerational transfers on this scale—even while they are ultimately unsustainable—are politically expedient only within the borders of a single country. When the transfers cross international boundaries it is an entirely different situation.

The Greeks, who have never in the past taken on much debt or paid much tax, nor who have benefited greatly from the funds foisted on their government by overseas banks looking for higher yields for their shareholders, are unlikely to succumb quietly to the demands likely to be made of them by their northern neighbours.

Any Greek government that attempts to enforce such demands is likely to be hounded and eventually voted from office. As go the Greeks, so goes much of the Mediterranean.

Anyone who imagines that this is going to have a happy ending for shareholders possibly has as an overly optimistic view of the depth of taxpayers’ pockets and their capacity for philanthropy towards their elderly and monied neighbours.

See Greece: Our Debt, Your Problem