Friday, October 14, 2011


I am reminded of bankers' meetings with companies which have hit financial trouble. The bankers sit around the conference table and one could read from their faces that the only question they have in mind is: "How can we get our money back?" They are accompanied by lawyers and consultants. The presence of the company's owner is being ignored and he feels like being nothing other than performing agent for the banks' interests.

Lenders to Greece ought to recognize that their Greek paper is today worth perhaps 30 Eurocents on the Euro. Instead on concentrating on sub-prime type of financial engineering how to package bad loans in such a way that they become good loans, they should use their brainpower to think of ways how that paper could increase in value perhaps to 60-70 Eurocents on the Euro. No loan is ever better than the ability of the borrower to pay it back (or rather: to refinance it). Would it not be logical that bankers spend their energy on how the Greek economy could become stronger so that it can generate the income for the state to service its debt?

I am also reminded of what happened - as I read it - in the weeks before the beginning of WWII. The powers of Europe were bickering against one another. The more they bickered, the greater the desire to "get it over with once and for all", even if that involved firing a few shots. When it hit boiling point, they stormed off to war jubilantly with the cries of: "We'll be back at Christmas time!" Well, they returned by Christmas time but it was Christmas 4 year later (and enormously much damage later).

Is patience wearing thin by now? Have we all sort of had enough of everything? Are we all tempted to get it over with? To cut bait? Let Greece declare default! Let Greece leave the Eurozone or, better yet, let's kick them out. It will be better for us and for them! Let's do it now and by Christmas time we will all have forgotten about it?

Or will we not?

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