Silly me. It’s Greek, apparently. At the same time that Greece wants existing creditors to take a haircut, they’re also wanting to keep borrowing money . . . from those same creditors. They haven’t got the write-down, or not yet, but they also want, and are getting now, lower interest rates and extended maturities.
The problem here is that one of the creditors, the IMF, is a preferred creditor, and the European Central Bank apparently is not permitted to forgive the debts, so any haircut will have to occur at the level of the different EU countries who have — cough! — invested their citizens’ wealth in Athens, and who cannot spread the misery outside their own borders, or at least not directly.
It gets even better: True to governmental traditions everywhere, the creditor nations are going to, in effect, hide their outright gifts to Greece by turning over any gains on transactions in Greek sovereign debt back to the Greeks. The linked article makes no mention of Greece making good any losses in such transactions. This is of course the classic dynamic of privatizing gains and socializing losses (think: Solyndra, GM, Chrysler), only the “public” and “private” in this scenario are supra-national organizations and sovereign countries. It’s every bit as much a gift of the people’s money as if the tax man showed up at your door, stuck a gun in your face, and made you empty your pockets into a pre-addressed, stamped envelope to Athens.
The Germans, as one might imagine, have some issues with that. For starts turning over the Bundesbank’s profits, for free, would require a legal adjustment to their applicable laws. The government has announced that it will attend to that. The German budgetary laws also do not permit the forgiveness of debt. All of the parties have stated as much. What will be done to change that, if anything, remains to be seen. If they do vote to change the laws I’d suggest before they do so that they first remove all lamp posts within a day’s drive of Berlin. I don’t claim any peculiarly keen insights into the German political character, but I have a hard time imagining the electorate — a nation of dedicated savers, if not outright pinch-pennies — endorsing just handing the stuff over to a country which would rather go on general strike rather than not retire with full benefits at age 55.
It’s sad, though, that it’s the Green Party, of all creatures, that on this one point at least is demanding that the truth be spoken: Their parliamentary leader has demanded that Angela Merkel finally come out and say plainly that all this largesse for Greece is in fact going to cost the German taxpayer money out of pocket. The Greens, for cryin’ out loud. Of course, while acknowledging the truth it turns out they’re just happy with it. They and the SPD have already announced that they’ll support the latest give-aways in the Bundestag.