Euro Doublespeak

"(...)In essence (...) it is the taxpayers of Greece, Ireland and Portugal who are bailing out German, French and British taxpayers and depositors — not the other way around. The indebted countries are not really getting bailouts, he said, “but loans at high interest rates.” For there to be a real bailout, he said, there would have to be a default.(...)"
-New York Times link

This (...) is the price populations are now being asked to pay for the EU's refusal to heap any economic pain onto the banks that lent these countries money. The alternative to shutting down schools, emergency wards, slashing pension rights etc would be to impose a penalty on those who lent the money in the form of a so-called "haircut".

Paradoxically this is exactly what the EU's proposed future grand bargain involves:(...) any banks that lend to countries that show themselves in danger of going bust would be deemed "irresponsible lenders" and penalized by not getting all their money back. (...)

So why don't they simply apply this market logic in retrospect and impose losses on the banks now?

Here we come to the naked struggle between countries and between interest groups. The banks that irresponsibly lent so much money to peripheral Europe are mainly in, er, northern Europe. France, Germany and Britain would be hammered if their banks were forced to take losses now on the stricken sovereign debts of the periphery.

So the essential deal involved in the new "stability and growth" (don't you just love Euro doublespeak?) arrangements would be: poor countries must pay through austerity so that rich countries do not go through a banking crisis.

-Paul Mason, BBC link