In the modern global banking system, all banks need a credit line with the central bank in order to be part of the payments system. Choking off that credit line was a form of blackmail the Greek government couldn’t refuse.
Greece’s former finance minister had a contingency plan if the country’s creditors shut down its banking system and blocked its ability to do business with other countries, as they eventually did. And he’s being pilloried for it.
Yanis Varoufakis, who resigned recently, predicted that the measures will “go down in history as the greatest disaster of macroeconomic management ever.”
The investment bank turned a huge profit by helping to hide the real extent of Greece's debt, and in the process almost doubled it.
The crushing Greek debt could be canceled the way it was made—by sleight of hand. But saving the Greek people and their economy is evidently not in the game plan of the Eurocrats.
As Greek lawmakers prepare to vote on EU austerity demands attached to a new bailout, civil servants announced a 24-hour strike, and hundreds of protesters gathered in Athens to show their opposition to the terms.
The aim of German Chancellor Angela Merkel and other EU powers in the Greek debt crisis is “apparently to humiliate Tsipras and his government in preparation for its early replacement with a more pliable administration,” writes Seamus Milne, associate editor of The Guardian.
The esteemed U.S. political economists say Western financial institutions are keen to bail out Greece because if they don’t, the country's existing creditors -- other Western financial institutions -- will fail to recover money they previously lent to Greece.
The U.S.-led global debt brokerage pulled out of negotiations with Greece on Thursday after it accused Athens of refusing to compromise over labor market and pension reforms.