There appears to be agreement for another Greek bailout. There is also increasing noise about a coming default, perhaps described by some other spin, but amounting to the same thing. At present it is very difficult to see where the economic activity to get Greece out of its debt morass is going to come from. The more it borrows the worse this is going to get.
There are also noises, perhaps no more at the moment than loud whispers, which talk of banks bearing some of the losses of a debt restructure. This makes sense, although if implemented would cause considerable problems with frail bank balance sheets. It makes sense because the utter abandonment of all the criteria of prudent lending, together with the stuffing of balance sheets with alleged assets which either had no reality at all or one a lot less valuable, is the core of the crisis. Once the principles of value and affordability are abandoned to the point were borrowing itself becomes the asset, which is what happened prior to the crash, collapse at some point is guaranteed.
Requiring investors and bankers to bear some of the losses on these sovereign loans would ensure that greater caution prevailed. A deal which demands that the taxpayer carries all the loss is not only a duffer for those taxpayers, but a licence to go wild with impunity. Setting all this right is now the priority in international finance. It will prove more difficult than the earlier rescue period of the crisis, for a number of reasons. Chief among them is that the debts are too big to repay without social unrest and that losses are in the end will have to be borne, at least in part, by those who made these bad judgements in the first place.
This may not be a good moment to stuff an investment portfolio with shares in banks. They appeared to ride out the crisis as if nothing had happened and go on paying themselves with a generosity which sickened the victims of their folly. Well that is coming to an end. Times for banks are going to get hard. Few will be sorry.