A gentleman called PIG, is about to go bust. He’s got a great idea. In order to survive, he’s selling his debts. He calls them State Bonds. Many people are buying them; they only want a low rate of interest and a tiny bit of interest when the capital is returned when the loan arrangement ends. Mr PIG has found the system for living above his means. He continues to get debts and to sell them. His family accounts however get worse and to protect themselves, those who buy his bonds, are asking for a higher rate of interest. Mr PIG is obliged to increase the interest rates. Over time, the situation becomes critical. The number of people buying the debt goes down as they are afraid of the risk. The debt is no longer triple A minusminus, but a triple B plusplus. The time will come when Mr PIG is no longer able to pay the interest. The neighbours of Mr PIG who have lent him most of the money, have nothing to gain by making him go bust. If he goes bust they will lose their money. Thus they offer him a loan with lots of conditions, something they call a “bail out”.
Mr PIG is obliged to accept so as not to go bust. When the money from the loan dries up, Mr PIG finds he’s paying more interest than before. Those who have lent him money have only gained time and now they are doubly at risk, they can lose both the State bonds and the loan that is the bail out.
Mr PIG, technically a bankrupt, is thus able to raise his voice as though it were he that had lent money to the others. He threatens to restructure the debt. In other words, those who bought his bonds at 100 will see the value halved to 50 and Mr PIG will be freed of half the debt with no one being able to stop him doing so. The creditors, who are ever more worried, don’t know which way to turn. In fact, the State bonds, like those of any company quoted on the Stock Exchange, can lose their value. The creditors have one thing in common with Mr PIG, the currency. Once upon a time, Mr PIG used the Drachma, now the Euro. His behaviour is putting at risk the good name of the currency of the virtuous gentlemen that have no debts or few debts. The Euro cannot be compromised. The neighbours can throw out Mr bankrupt PIG from the Euro and see part of their credit go up in smoke for ever or continue to give him finance with one “bail out” after another. Germany and France have about 250 billion dollars in Greek State bonds and because of Mr PIG, the Euro is losing value in relation to the dollar and the yuan. Mr PIG leaves the Euro and his State bonds become waste paper. I would like to find the logic and the moral of the story, but I cannot.