By Dave Anderson:
Time to make the bankers' failures their own problem.
John Lanchester in the London Review of Books on the Greek cram-down plan of austerity, higher taxes and keeping the French and German banks whole:
The Greeks know they are being lent money just so they can work very hard for lower wages and higher taxes in order to pay it back at great cost. This arrangement is in place because of the second thing the Indignati know well, the fact that the outstanding Greek debt is mainly owned by French and German banks. This is why the Western European governments are especially keen on the �bailout�: it�s helping to keep their banks solvent. The Indignati do not find that a compelling reason to embrace a decade or so of abject misery. They want the Greek government to default, and the banks to accept losses for loans they shouldn�t have made in the first place.
The fundamental job of a bank is simple. A bank is supposed to accurately assess and price risk of borrowers before lending them money.
The major European banks failed at that job. The major European bankers failed in their jobs. Let them take their losses --- or is responsibility and consequences only for the peons.