SPECIAL FEATURE: Beware of Greeks bearing gifts
I cannot surely be the only person to see the tragic irony in the tussle taking place over the now more than likely payment default on the bailout loan made to Greece in light of their recent general election result.
Given the not so distant history in the UK of making loans without proof of ability to repay, the European Union, European Central Bank, and International Monetary Fund also now find themselves in the position of many of our lenders post 2008, with a loan that might very well go bad.
However, while unlike the poor UK householder, Greece is unlikely to be repossessed, this could herald a bloodbath if Greece refuses to pay, as other EU members with onerous loan agreements decide that what is OK for Greece should also be good for them.
The irony comes from the fact that the loan was granted to a borrower, which by any test of ability to repay, even given we are working here with hindsight, had not a snowball’s chance in hell of actually being able to make repayments in full. The conditions of the loan and the price paid by the Greek economy were always going to be too great.
The lending triumvirate is guilty of the same kind of myopia as many of our domestic lenders pre 2008, who were happy to make loans on the assumption that gravity and the market would not catch up with ‘wishing’ everything well.
In the Greek case, the loan was granted on the premise that by not doing so would hasten the end of the Eurozone and then the whole closer integration experiment, as one bankrupt economy would lead to other EU members defaulting and increasing the contagion.
So the gamble was taken to kick the problem down the road by granting the loan and hoping a future improvement in the Eurozone economy would provide the necessary impetus to help repayment.
However, like many loans made in hope rather than reality, the burden of repayment has actually made matters worse and only put off the day of reckoning. Another overextended borrower is now in a worse situation by taking on more debt.
So as I have a more parochial if tongue in cheek agenda, the question I want to ask is which of the multitude of Euro bureaucracies, which continue to pontificate to the UK on lending practice, is going to deal with this example of poor lending practice?