[Marxism] Fwd: Why we've been discussing the Greek bail-out in the wrong way

Louis Proyect lnp3 at panix.com
Fri Apr 10 06:20:12 MDT 2015

Many would argue that all this bail-out money helps prevent Greece from 
suffering the stigma of a default. A bankruptcy would make the Greek 
state untrustworthy in the eyes of financial markets, as the story goes. 
But Greece has been – unofficially – bankrupt since 2010 and it is 
questionable whether a formal bankruptcy could damage its financial 
credibility as a creditor any further. Instead, it is plausible to 
conjecture that Greece would be attractive to investors only once it has 
a more sustainable debt. It is worth noting in this regard that, 
although Greece has suffered ramifications probably harsher than the 
effects of a bankruptcy, it has yet to benefit from bankruptcy’s 
debt-liberating effects by being repeatedly “rescued” and not being 
allowed to “go bankrupt”.

This proposition begs another question: doesn’t Greece still benefit 
from being helped to remain in the eurozone? As is often remarked, a 
full-blown bankruptcy would be dovetailed by a Grexit with unknown, yet 
arguably dire, consequences. Granted. But what is nonetheless 
conveniently unexamined is why these prophecies would likely be fulfilled.


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