I Like Your Haircut

So lenders are being shorn. The haircut the public are expected to take looks more like this

Sixty percent – the haircut that lenders to Greece may have to take if Europe is to avoid bailing their economy out to the tune of half a trillion. Maybe the powers that be – the ‘troika’ of the IMF, the commission, and the ECB – are finally coming to terms with the idea that crushing all life out of a country with punitive austerity makes about as much sense as treating traumatic blood loss with leeches. If the eurozone economies are to be saved then the continent’s major banks are going to have to take some of the pain too.

For Greece only, you understand. The same logic doesn’t apply to us for some reason.

A patient at Our Lady of Lourdes Hospital in Drogheda, Louth, just spent five days on a trolley in the Accident and Emergency department. In better days that would have constituted a horror story in itself, but today it barely raises an eyebrow. Wait till you find out what he had. TB. Tuberculosis. There in public, with a constant flow of sick and injured people around him.

The devastation that TB wrought on this country, that’s still a living memory. It was one of the primary forces that led to the creation of what social health provision we had. Which is now in danger of being sacrificed to expediency – and banks. Banks that lent recklessly into our economy because they were out to make a profit, yet somehow must not be allowed to take a loss.


3 thoughts on “I Like Your Haircut

  1. The good thing about the haircut is that the Greek taxpayer doesn’t have to cough up all the money. The bad thing is: somebody ends up having to. Or at least, having to make a major write-off on assets.

    And that’s where the “systemic” crisis bit comes into play. Because how many of the billions that the haircut saves the Greek, is in hands of Irish banks?

    It’s the big problem of the current system, everybody has written IOUs to eachother, without any actual value or goods guaranteeing it. The fundament of modern banking had always been explained as “turtles all the way down“. But now we’re figuring out, it’s not.

    The haircut strategy sounds good to the taxpayer. The risk however is that we’re Wiley E. Coyote, cutting off a cliff. Which part of the hair are we cutting off?

    [/analogy and metaphore overload]


    1. Less “turtles all the way down” than “mirrors in every direction”. If every loan is an asset, then all the impoverished have to do to become billionaires is furiously lend to each other.

      Ultimately the lenders have to suffer for their ill-judgement, and that means the ones that profited by pouring money into the more peripheral economies. So it’s going to hurt everybody’s taxpayers.

      All I hope is that before it gets to that, it can be made to hurt reckless commercial lenders as much as is conceivably possible.


      1. You make it sound like it’s just high-frequency hedgefund-running speculators that will bleed. The reality is that the boring old debt is held in large amounts by boring institutions like pension funds. It’s grandma that’s bleeding. The bankers are still getting their bonus. And what’s worse, none of them is going to jail for robbing grandma. It was all legal.


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