You are missing the crucial piece

Reader comment on: Greek Bailout Deal
in response to reader comment: let the free market work

Submitted by ben (United States), May 10, 2010 12:29

If Greece restructures its debt (defaults), those who lent them money suddenly have fewer assets than what they had presumed, and are therefor overleveraged. When people (hedge funds, pension funds etc) worry their money is not safe in a bank, they take it out. The banks fail. The system freezes. Should those banks pay a price for making bad bets on Greek debt, or course. Are they "too big to fail?" Probably. Once again, the average taxpayers gets hosed because the system did not have the checks in place. It is the socialization of risk, and privatization of reward.

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