Greece and US Debts

I read, the other day, a comment about the situation in Greece that got me thinking. The comment ran something like “The ordinary citizens of Greece are wondering why after going to work and paying their taxes all their lives suddenly they’re being asked to accept brutal ‘austerity’ measures and to sell off national assets in order to qualify for a European ‘bailout'”. That seems a sensible question to me. Is it, perhaps, parallel to the question Americans could be asking along the lines of “After working and paying my taxes all my life, why am I being asked to sacrifice my retirement or healthcare for my parents?” in both cases, it seems to me, there is a disconnect between the demands made of workers/taxpayers and the responsibility for the fiscal problems that prompt those demands.

I suppose one could argue that fiscal problems result from the electoral choices of the voters both in Greece and the USA, that is, that the voters elected the politicians who made the mess. Certainly there are those that would say “Those lousy tax and spend Democrats ran us into debt” (deftly ignoring the Bush Tax Cuts, his two unfunded wars and other inconvenient data). But I wonder if it’s time to go beyond this simple trope.

You can’t have debt without two participants: the borrower and the lender. As the media hypes ‘Greek default’ one is tempted to think of deadbeat borrowers and assume it’s all their fault.

But wait a minute. What about the other side of the transaction? If we agree that mortgage originators in the US who sold liar’s loans to folks who really didn’t qualify were partly responsible for the 2008 crash, and by extension the banks who encouraged them to do so, then the situation in Greece – and the US – may not be so simple.

In this moment when bank profits and bonuses are beyond belief (and greater than before the 2008 crash) the (well-mananged?) perception is of  noble creditors and lousy debtors. I am not so sure the creditors are all that noble. TARP may well have been an institutionalization of moral hazard: why be responsible about making loans when you know the federal government will bail you out no matter what you do?

At this moment, it’s safe to assume that the money in the banker’s personal accounts is well protected: we’re not getting it back – it’s gone down the rabbit hole. It’s also safe to assume that the banksters and their minions in government aren’t going to change things anytime soon. So what’s an ordinary citizen to do?

The most recent news I saw suggested that the Greek Parliament had voted to accept the ‘austerity’ measures demanded by the banks. You can read about them here. I wonder how (if) that will play with ordinary citizens. And I wonder what lessons we might draw if, as Jon Stewart noted, each Greek citizen owes $44,000 but each American owes $45,000.


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