But alongside this levy will be a buyback. Guess who’ll be doing the buying?

European banks, senior credit managers and EU officials remain at loggerheads this afternoon BST . There is posturing on both sides: the banks say the officials are asking them to break EU banking rules in order to participate in a haircut re outstanding Greek debt….which is correct. And the officials say the banks are hiding behind the rules without suggesting any alternatives….which is right on the money: for the bankers this is a very convenient law – one which they themselves helped to draft ten years ago.

But I understand from credit sources that Brussels has now discreetly told the banking delegations that it will, if necessary, impose a banking levy in order to raise in the region of 4-5 billion euros the Greeks need to stay afloat in the medium term – that is, to keep servicing its debt of 1.6 times GDP. Alongside this, it seems, there will be what one source referred to as “an EU funded buyback operation”. This is euphemistic gobbledygook for Greek banks buying back their own debt, but using eurozone taxpayers’ money to do it. In ancient Greek history, this used to be called a bailout.

This last is what Greece really needs, because once the dust has settled, the banks will go home happy that somebody else stumped up most of the cash; and in theory the Athens government will not owe private creditors money any more. The Slog has also learned that there is a Brussels-inspired deal on the table for those tax monies involved in the buyback to be offered at a discounted interest rate.

The problems for us out here in the real world are (1) the banks win again (2) this is really a disguised taxpayer bailout, and (3) we are still left with the problem of what to do when each of the upcoming collapses occur elsewhere.

Opinion is divided as to whether Germany will buy into this. Trichet at the ECB probably will, because it doesn’t require him to buy any more junk; but one suspects Merkel will see it for what it is – an EU/banking scam to pile more pressure on the innocent taxpayer.

Debt forgiveness is the only answer. But it’s becoming increasingly clear that the banks will have to be forced into doing it: for as we know, their bonus pools and shareholders come a long, long way ahead of societies and taxpayers in the queue for their attention.