This is all from an American point of view, so grains of salt are passed all around.
Imagine if a waiter making $30k a year, who is living paycheck-to-paycheck and is sinking ever further into debt due to outstanding credit-card and student loans, requested a $40k loan. Imagine he was granted it, and proceeded to blow it all on booze and hookers. What then? (These numbers are roughly proportional to Greek GDP per year and its outstanding debt, respectively.)
Obviously, there is no scenario where the $30k/year worker could ever hope to make a dent in that loan, if he’s already living paycheck-to-paycheck. The creditor’s first instinct would be to garnish his wages, so that he could barely even survive. But even then, he’s made it even harder for the waiter to earn a living by taking away his car, for instance.
The only sane and logical outcome is bankruptcy. Yes, the waiter deserves to have his credit rating trashed, but by the same token, his creditors deserve to simply eat the lost money due to their poor decisions leading them to grant the loan to begin with.
Yes, it is better for everyone involved to simply acknowledge the reality that Greece cannot repay its debt, and to allow it to either default or else return to the drachma and go through a default-in-kind through hyperinflation. It’s good that kicking the can down the road has finally come to an end.
This is because “kicking the can down the road” has become such an overused expression on Greece that it has become its own cliche with the pundit class. And for good reason: no EU decision on the Greek debt crisis has ever acknowledged the fundamental truth that Greece can never, ever repay its current debts under any scenario.
I don’t know how many “restructurings” and “bailouts” they have gone through since 2008, but not a single one has acknowledged the fundamental unreality of Europe and Germany’s attitude towards their Greek debt. They seem to believe that further and further austerity will magically cure the uncurable. They believe that slashing the waiter’s wages will somehow make him more, as opposed to less, able to meet his debt repayments.
Yes, the Greeks were spendthrifts. But at the same time, the EU and the various banks were stupid and short-sighted for lending to Greece and for admitting it to the EU to begin with. It’s the lending officer who is popularly regarded as the decision-maker when it comes to loans, and not the applicant. Bankers now whining now about how the “applicant” need to come to terms with their own idiotic failures in granting the loans to begin with. These banks need to come to terms with the fact that it is partly their own fault, and that their loans will never be repaid.
Either way, though, it’s good that the charade has finished, and the endgame is being experienced now as opposed to five or ten years later. Just get it over with. I cannot think of a crisis in human history that has been made better by simply putting it off.