Some top executives on Wall Street argue that it would be much worse for creditors to cave in to demands for more lenient terms from Greek’s anti-austerity political leaders. Because that would mean other debtor nations would also soon clamor for relief. Better to rip the bandage off and put an end to the charade that Greece will ever pay back all its loans.
“In 2012, if Greece blew up, it would have posed serious systemic risk,” said one Wall Street chief executive who declined to be identified by name. “But now, the private sector has nowhere near what anyone would dream of calling systemic exposure. In fact, any capitulation by creditors of any significant magnitude would be the real source of systemic risk.”