The fact that it is not major news is cause for thought. Attitudes appear to have departed far from accepted financial norms. In normal financial circumstances no failed debtor who falsifies accounts would ever be given a second bail-out.
The reasons that it appears to be acceptable to bail-out Greece despite Greek reluctance for financial prudence have been outlined elsewhere in this blog, and include:
- the need to protect at any cost those financial institutions which have insured Greek debt and which have been deemed "too big to fail";
- the political motivations to preserve the perception that Europe is unified; and
- the prevention of a "run" on other peripheral European banks.
Goldman Sachs, one "too big to fail", were party to accounting and financial arrangements with the Greek government to conceal the true status of Greece's national accounts.
Preventing Greek default risks amplifying risk now and amplifying financial consequences later. It is not helpful to pretend a bankrupt is not bankrupt.
See "Hellenosline" and the "Schirach report" for commentary about falsified national accounts.