General Discussion
In reply to the discussion: A lot of people here seem to have no clue about what's happening in Greece..... [View all]jeff47
(26,549 posts)A very significant chunk of the debt came from bailing out private, mostly non-Greek banks. So the EU/IMF makes a loan to Greece, and Greece turns around and gives the money to a French or German bank because of the bad loans that bank made on Greek vacation homes - they had a housing bubble like Florida. Why'd Greece do this? It was a condition of getting the loans to handle its other debt.
Like the US, they nationalized the bad debt instead of telling the banks "Well, you fucked up. Enjoy your losses".
Also, your "What needs to happen now" ignores that the EU central bank is running the EU economy for Germany's benefit. Some inflation in Germany would do all of the "crisis" countries a hell of a lot of good. Inflation is far less economically destructive than deflation.