I’ve been thinking about the economic crisis in Greece (and the rest of Europe), and I have one question: When did bankers stop acting like businessmen and start acting like gangsters, who will kneecap customers if they don’t repay their loans?
I don’t ask this question because I am a socialist, I ask it because I am a capitalist! The whole point is that in order for capitalism to work, there must be risk associated with any reward. I have invested in many companies, big and small. I’ve made money off some of them, and some of them have failed and I lost some or all of my money.
Yes, Greece made bad decisions. They have huge debt. But what nobody seems willing to point out is that you can’t rack up debt without somebody loaning that money to you and charging you interest. The interest is the reward for doing business. The risk of doing business is that some of the loans will fail, and the bank will lose money.
This is not a bad thing. Without risk, there is no incentive to make good loans. We saw what happened in the US when the economy melted down, because bankers lost all incentive to make good mortgage loans. Stupidly, we bailed them out — I’m not talking about the homeowners who were in danger of becoming homeless, we insanely bailed out the bankers who made the bad loans. And then the bankers gave themselves bonuses for their “success”. Seriously.
And now the same thing is happening in Europe. If Greece doesn’t repay all of their debts, with interest, Europe will kick them out of the Eurozone. When did we give bankers power over whole countries? Even the IMF is admitting that by forcing austerity on Greece, it will further damage their economy. Do we never learn? A good definition of insanity is to keep doing the same thing when it keeps failing.
And the real hypocrisy is Germany, who are lecturing Greece about repaying their debts. As economist Thomas Piketty points out, Germany has never repaid its debts. They didn’t after WWI, and again after WWII. And not just Germany. Other countries, including Great Britain and France, were once in the situation facing Greece today.
And the bankers have the audacity to say that if we don’t punish Greece for their bad decisions, they will never learn. Will bankers ever learn that they can’t have rewards without risk? Bankers, heal thy selves.