[VieElm]

I think the problem with "forgiving" the debt is that 1. someone is going to pay for that debt, the debt that is owed to someone is on their balance sheet as (rapidly declining) value they possess. That is the debt doesn't magically disappear, someone has to pay for it one way or the other. 2. Those in position to pay that debt fear Greece is just a bottomless pit that they'll be "forgiving" debt for a long while to come since Greece's social programs aren't sustainable and there aren't any indicators that Greece's economy will grow fast enough to support them. The problem isn't just debt that's owed now, but the money Greece will owe in the future (and can't pay) given Greece's situation.

People that are going to have to pay for Greece's problems don't just want an end to Greece's current problem just to fall into the same trap soon here after, lurching from one crisis to another. I think that's a pretty fair concern to have.

[guelo]

This points to the real problem. When Greece was originally "bailed out" in 2010 what actually happened was that the debt was moved from German and French banks to EU taxpayers. The banks were paid in full by the EU and IMF for all the bad debt they had made. But capitalism cannot work that way, when lenders make a bad loan they're supposed to take the losses, that's how interest rates are set. If they can lend without any risk then the whole market gets out of whack.

On your point #2, Greece has been running a primary surplus for several years now, meaning the government takes in more than it spends before debt payments.

[chm]

Say you're a homeless junkie multiply convicted of petty theft. Then say I lend you 20$, with 50$ due a year hence. Who made a bad decision? And who's going to be surprised I haven't got my money back in a year?

I don't think it's as simple as that with Greece, but obviously at some point creditors need to bear the risk as well. It can't be an "always win" situation for them, and I don't think it has been. Question is where to draw the line?

[dllthomas]

On the other hand, that asset on their balance sheet was returning a higher rate due to risk that Greece might someday have to default...