It wasn't the Greeks who had a word for it. It was British novelist George Orwell, author of the dystopic masterpiece "1984," who coined the word "doublethink." His definition stretched over 143 words, so we won't repeat it here, but hypocrisy and the ability to hold two contradictory opinions simultaneously were major components. Today, the Greeks and their tormentors alike have blossomed into masters of the art. The Greeks want Europe to save them from the consequences of their own fecklessness (and, no, it wasn't just government's borrowing that was at fault, but also a culture of avoiding taxes and cooking the books to qualify for euro entry). But they certainly don't want the pain that goes with a bailout. Who would?
And that's the other half of the problem. None of the rest of us wants the pain of bailing them out either. But we also don't want to imagine, for even a fraction of the time it would take to prepare for the consequences, the pain of not bailing them out. Perhaps it would be worse than the pain we felt post-Lehman. But perhaps it wouldn't be nearly as bad as we fear. There is at least some clarity, after all the European Union and International Monetary Fund scrutiny over the past two years, about where the debt is held, by which banks and how much there is.
But let's not kid ourselves. We don't even know at this stage what would constitute a default. European governments, led by Germany and France, have agreed -- nonsensically -- that private-sector bondholders should be encouraged to take some of the pain of a Greek bailout voluntarily, as a way of appeasing taxpayers who are now on the hook for it all. But the ratings agencies have just told them that any extension of repayment deadlines, voluntary or otherwise, would count as a default. And here's another fine piece of doublethink: Euro-zone governments have agreed that any bonds issued in the future by their €500 billion ($720 billion) rescue fund for troubled member states will no longer enjoy preferred creditor status, as previously envisaged. So private investors are to be reassured they won't be ranked below taxpayers in any restructuring, while taxpayers are to be reassured private investors will share some pain voluntarily. Go work that one out!
Still, it's the view from the City that interests us here. Or at least from two cities: the City of London, where the financial power resides, and Westminster, where we conduct politics and royal weddings.
"Thank God," said Prime Minister David Cameron recently, Britain had stayed out of the euro. He insisted the U.K. had no obligation or responsibility to help Greece with any contribution to a euro bailout fund, although it would do its bit as a member of the IMF. Treasury Minister Mark Hoban pointed out that British banks' exposure to Greek sovereign debt was only about $4 billion, much lower than that of Germany, with $23 billion, or France, with $16 billion. That is correct, although a substantial chunk of the British holdings -- more than $1.4 billion -- is owned by the taxpayer through government-controlled Royal Bank of Scotland Group plc. There's also quite a lot more in loans to Greek banks and nongovernment debt. Treasury officials reportedly estimate British banks would lose about $13 billion if the Greek economy collapsed.
Every room has its elephant, and Cameron and his ministers are ignoring quite a few of them. Elephant No. 1 is Ireland. Britain didn't step up to the plate as a member of the euro zone. But it very swiftly offered some bilateral loans of its own. Quite apart from banking exposure, Ireland is a big trading partner and a nation in which we have enormous political and financial investment -- to say nothing of a long and fraught history.
The rest of the herd trumpets noisily around the periphery of the euro zone, not least in Greece itself. What happens if Greece does default? Will it be expelled from or secede from the euro, possibly taking a few other fringe members with it? Is Britain -- indeed is the global financial system -- ready for the chaos such an unplanned breakup could unleash? Even if Greece stays within the zone, the risk of contagion to far larger economies would hardly leave Britain unscathed. British banks' exposure to Spanish banks has been estimated at about $115 billion. What do we do -- what does the euro zone do -- if Spain gets trampled? Call in the IMF? The Qataris and the Chinese? Run for our lives?
Britain has every reason to be grateful it is not in the euro. But political prudence calls for more humility and less self-righteous posturing. It wasn't the Greeks who had a word for it. It was the Poles, back in the days before the fall of the Soviet Union. They called it Solidarity.