When French Folly and German Naiveté unite against Greek debt:
Another sorry episode of how not to deal with a systemic crisis
, , 1 Comment  This article was originally posted on Yanis’ blog
today. Republished here with the kind permission of the author.
While crises are the laboratory of the future, the euro crisis
is proving more like the alchemist’s lair. Back in November, the
brilliant idea was touted, with considerable fanfare, of having
the EFSF buy (at a discount) Greek and Irish bonds in the
secondary market (in order to effect a non-default haircut).
Despite the excitement it caused, that idea did not fly (for the
same reason pigs find it hard to achieve the lift necessary to
get airborne). The last few days of high drama, centred around
Athens’ Parliament and beamed into homes the world over, seems
to have spawned another grand scheme. This time, it has its
origins in the French banks which have, in view of the calamity
that will befall them if Greece defaults (and their Greek
subsidiaries crash