Greek Bailout Money: Another Case for Oh Dearism

Since very few of my readers checked out the Oh Dear theory you might not be familiar with the notion. 

It refers to the corporate media's concerted effort to make any issue unintelligible and scary so that your reaction as a consumer of news is to whisper "Oh Dear" instead of "OK I see why" like this case.

I am not even the person who coined the phrase. This guy is.

In any event, the Greek economic crisis and the so called Grexit makes another compelling case.

During the tense negotiations, we read about how Greeks were lazy and greedy, how they squandered the bailout money again and again. There are too many links, just check out my previous posts if you are curious.

There were ominous hints about their future outside the Eurozone. BBC reported that if the crisis continued their tourism revenues would collapse even though the obvious attraction of cheaper holidays in an ISIS dominated Mediterranean would be a no-brainer for anyone.

Moreover, news outlet claimed that things looked bleak because of the Syriza government: they singlehandedly crushed Greek recovery and put Greece back into recession, they said.

Curiously, ever since Alexis Tsipiras agreed to a very onerous deal that is guaranteed to destroy the Greek economy, the corporate media changed its tune.

It now looks like that their previous reporting on "them profligate swarthy folks" was not exactly correct.

There was a recent story in the New York Times that acknowledged that Greek bailout funds came in only to leave again instantly. Apparently, none of it remained in the country.

Wow, who knew?

Bloomberg immediately and breathlessly agreed.

It was not the profligacy of them swarthy, greedy and lazy Greek folks, they said, the whole thing was set up to bail out German and French banks.

Really? You don't say.

Yeah, it was never intended to benefit the Greek economy.

Listen to this, Bloomberg sounding like a contrarian progressive.

I always find it amusing whenever someone expresses surprise that the financial bailouts for Greece haven't benefited Greek citizens. "Bailout Money Goes to Greece, Only to Flow Out Again" in the New York Times is just the latest example. "The cash exodus is a small piece of a bigger puzzle over why — despite two major international bailouts — the Greek economy is in worse shape and more deeply in debt." 

Unfortunately, this is a feature of bailout, not a bug.

The author maintains that this has been the case in all recent bailouts, including the 2008 US crisis and of course the Irish and Icelandic bailouts, as some folks noted many years earlier.

As for Greece, well, here is the reality, after the fact.

In the case of Greece, the money flows in large part from European governments and the International Monetary Fund through Greece, and then to various private-sector lenders. We all call it a Greek bailout, because if it were called the "Rescue of German bankers from the results of their Athenian lending folly," who would support it?

No kidding.

Except where were you four months ago?

There is more.

Now the BBC reports that every time Germany pushed Greece towards bankruptcy, every time Schauble feigned disgust with his Greek counterpart and clutched his pearls and went for the smelling salts, Germany made money.

However, the study by Halle Institute for Economic Research said Germany had made interest savings of more than 3% of GDP between 2010 and 2015, and much of that was down to the Greek debt crisis. 

The IWH study says every time this year there was a spike in the Greek debt crisis, which made Greece's exit from the euro appear more likely, German government bond yields fell. Whenever the news looked better, Germany's bond yields increased.

So far Germany made 100 billion euros out of the Greek crisis.

Yes 100 billion.

They contributed 90 billion euros to save the Deutsche Bank and have already recovered more than that while squeezing Greece for another 90 billions.

And the beauty of it is that it is a gift that keeps on giving.

 Even if the situation were to calm down suddenly, Germany would still be expected to profit from the situation, the IWH argues, because medium- and long-term bonds issued in recent years are still far away from maturing.

Once again my question is, where were you when the narrative about the lazy Greek people living off the savings of honest Aryan people was solidifying?

When the whole Europe was whispering "Oh Dear!"

In case you read this as a vain stupid "I told you so" on my part, this is not the case.

The reason I refer to my previous posts is to highlight the fact that, if I, the lowliest and the most marginal commentators of the Intertubes could suggest where this was going, months or even years earlier, surely Bloomberg, BBC and New York Times could have done a little more than repeating the mainstream "profligate Greeks" narrative.

They didn't. Which clearly indicates that they didn't want to. And not they didn't know.

That is why we live in a world where your co-workers and neighbors tell you the most inane things with conviction followed by an Oh Dear expression.

Oh Dear, indeed.