In the end, it was Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France against the European banking establishment — and the bankers blinked......
For hours, negotiators had been trying to persuade the banks to accede to a “voluntary” 50 percent loss in the face value of their Greek bond holdings. The banks, which had already agreed to a 21 percent write-down, had dug in their heels.
They knew how badly the European leaders needed a deal, and how much financial experts feared a disorderly, involuntary default. That could set off a “credit event,” throwing world financial markets into turmoil, much as the collapse of Lehman Brothers did in the fall of 2008.
But Mrs. Merkel called the bankers’ bluff, said officials present at the discussions. Accept the 50 percent write-down, she told the bankers, or bear the consequences of default. In effect, she was willing to risk a credit event, and to place the blame for any fallout on them.
Pretty much the opposite of what happened here, during the 2008 financial crisis. Instead, US banks and financial institutions got massive bailouts and paid almost no price for their excessive risk taking and idiotic decisions. And taxpayers paid the price while the financial industry booms. But god forbid we have writdowns on underwater mortgages, student debt forgivemness or expanded social services support for the poor and unemployed. That's socialism/moral hazard/class warfare. All hail the JOB CREATORS!
