Greek Bailouts: Debunking the 'Foreign Banks' Myth
15 Pages Posted: 6 Apr 2017
Date Written: March 2017
If there is one indelibly recurring myth surrounding the infamous bailout loans received by Greece for the last seven years it's that the money went overwhelmingly to foreign bankers (who owned allegedly massive Greek government bond portfolios). This ever so popular argument attempts to fan the flames of social discontent by complaining that it was powerful politically-connected big international financiers, and not average vulnerable Greeks, who directly and truly benefited from the rescue programs. In that sense, the gargantuan emergency lending put together by the Eurozone and the IMF would have been a de facto transfer of global taxpayer money to the largest international banks. Foreign speculators got the cash while Greece was left to starve in a sea of untold austerity, would go the story. There is only one problem with this tale: it's not true. Hard cold data, even when suffering from the perils of estimation, dictates that in fact the least amount of bailout money would have gone to private foreign creditors. Much more money went to the Greeks and to the Eurozone-IMF themselves. The truth of the matter is that the bailouts have overwhelmingly been used to assist institutions, people, and the state in Greece. Foreign bankers got some (mostly, initial) value but were left nursing huge losses in the end.
Keywords: Greek bailouts, Greece debt, Troika
Suggested Citation: Suggested Citation