Paul Krugman, who, in case anybody bothers to check, has been right, right, and right about Europe for the past several years, while the Austerians and Germany have been wrong, wrong, wrong, has a new column on Greece which has some useful facts for anyone willing to pay attention:
Or to oversimplify things a bit, you can think of European policy as involving a bailout, not of Greece, but of creditor-country banks, with the Greek government simply acting as the middleman — and with the Greek public, which has seen a catastrophic fall in living standards, required to make further sacrifices so that it, too, can contribute funds to that bailout.
The funds lent to Greece since the crisis have gone to pay interest and principal on its loans to those creditor =country banks. Because bailing out banks that have made egregiously foolish loans is not the sort of thing that's really popular, it's necessary to write the story as a myth and morality play.
Doing the right thing would, however, require that other Europeans, Germans in particular, abandon self-serving myths and stop substituting moralizing for analysis.
Can they do it? We’ll soon see.
Merkel says no. If somebody pulls the trigger, Europe could unravel rather quickly.