Iâ(TM)m not blaming âoebankersâ exactly, Iâ(TM)m blaming people who loan money to people who are may or may not pay it back and when they dont get paid back they go running to their central banks or governments and demand they get made whole at the expense of everyone else. Same thing happened in the U.S. in 2009 with the TARP and assorted other bail outs.
Yea the rating agencies really sucked especially leading up to the crash in 2008, but it doesnâ(TM)t relieve lenders of ultimate responsibility for their actions. If the credit ratings are wrong its the responsibility of the lender to figure this out, no one else.
Lenders collect interest on their loans partially to cover the potential risk they wont get paid back, the higher that risk the higher the interest they collect. If they collect high interest rates on risky mortgages and then when someone defaults on them central banks and governments make them whole it creates massive moral hazard.
If the Greeks were a bad risk prior to 2008, which they probably were, the interest rates they had to pay should have been higher and they would have been dissuaded from borrowing or lenders would have been dissuaded from lending to them. Instead the EU created a perverse system where risky borrowers (all of the PIIGS) got relatively cheap money and a lot of it and were incentivized to take as much of it as they could. The EU and the lenders are 100% to blame for this situation for throwing the money at them.
The PIIGS shouldâ(TM)ve never entered an economic union with Germany in the first place, they had no chance of competing with Germany locked in to the same currency. It was a win win for Germany on all fronts.