HUFFINGTON POST

Germany Won't Spare Greek Pain -- It Has An Interest In Breaking Us

Greek Finance Minister Yanis Varoufakis gives a speech during an economic conference in Athens, on Tuesday, May 14, 2015.  Va
Greek Finance Minister Yanis Varoufakis gives a speech during an economic conference in Athens, on Tuesday, May 14, 2015. Varoufakis said Thursday that he will reject any deal with bailout creditors unless it helps Greece escape from its financial crisis. (AP Photo/Petros Giannakouris)

Greece’s financial drama has dominated the headlines for five years for one reason: the stubborn refusal of our creditors to offer essential debt relief. Why, against common sense, against the IMF’s verdict and against the everyday practices of bankers facing stressed debtors, do they resist a debt restructure? The answer cannot be found in economics because it resides deep in Europe’s labyrinthine politics.

In 2010, the Greek state became insolvent. Two options consistent with continuing membership of the eurozone presented themselves: the sensible one, that any decent banker would recommend – restructuring the debt and reforming the economy; and the toxic option – extending new loans to a bankrupt entity while pretending that it remains solvent.

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