Once there was a person, his name was Greece. He had a habit of extravagant spending and once his own money got over he used to borrow and spend. He had a large number of well to do relatives who were happy to lend him money (Eurozone Countries). He kept on borrowing and they kept on lending to him till he almost became bankrupt.
Now all his relatives knew that there is no way that this person is going to return the money. However they were afraid of telling this to their own families as well as outsiders otherwise their own credibility and financial standing would come under cloud. They then looked at Indian PSU Banks and hit on this great idea of “Restructured Loans”. They were amazed at the ability of these banks to evergreen their loans and decided to do the same with Greece. They restructured the loans of Greece to very far back into the future. Their bet was that when the repayment becomes due they would all be dead and the liabilities would need to be paid to the next generation.
However what they did not realize was that Greece was so used to spending beyond his means and the loans on him were so great that he was borrowing more and more to live everyday. Eurozone then forced him to cut spending, sell his assets etc. He would show them that he is doing what they are saying but would always go back to the old ways. Eurozone tried to instill fear in Greece by threatening Greece however this lead to people questioning their own credibility of poor credit appraisal.
Greece knew that he has nothing to lose. However he is sad as he cannot spend as much as no one is willing to lend him more. He is now frustrated, he wants more money but no one is giving him money. He starts threatening his borrowers and carries out a referendum in his house on whether we should cut down our expenditure and do a more austere living. Obviously his entire family says NO,NEVER. He goes back to Eurozone and says “My family says they cannot change how they live so give me more money”.
Eurozone tells Greece, buzz off. If you need more money give us a guarantee that you will repay in the future. For this shift some of your assets to a Special Purpose Vehicle which will sell these assets and repay the money to us. Also give us written commitments from your family members that you will cut your expenses. Since you have always gone back on your promises we need guarantees now.
So this is where the Greek saga is now. It is a big family problem which has nothing to do with the rest of the people or the world. Greece owns most of his money to his extended family. If he does not repay them it will only weaken his other family members. The only risk would have been if his non repayment would weaken the financial position of of his other family members so much that they in turn would not be able to repay the people who they have borrowed from, which is not the case.
GREECE IS A NON-ISSUE FOR REST OF WORLD. Please move beyond it.