VOW OF PROPERTYFather Arsenios at the Vatopaidi monastery, overlooking the Aegean Sea, in Mount Athos, Greece. He is considered by many to be Vatopaidi’s C.F.O., “the real brains of the operation.”BUSINESSAs Wall Street hangs on the question “Will Greece default?,” the author heads for riot-stricken Athens, and for the mysterious Vatopaidi monastery,which brought down the last government, laying bare the country’s economic insanity. But beyond a $1.2 trillion debt (roughly a quarter-milliondollars for each working adult), there is a more frightening deficit. After systematically looting their own treasury, in a breathtaking binge of taxevasion, bribery, and creative accounting spurred on by Goldman Sachs, Greeks are sure of one thing: they can’t trust their fellow Greeks.BY MICHAEL LEWIS • PHOTOGRAPH BY JONAS FREDWALL KARLSSONOCTOBER 1, 2010After an hour on aplane, two in a taxi,three on a decrepitferry, and then fourmore on busesdriven madly alongthe tops of sheercliffs by Greeks oncell phones, I rolledup to the front doorof the vast andremote monastery.The spit of landpoking into theAegean Sea felt likethe end of the earth,and just as silent. Itwas late afternoon,and the monks wereBeware of Greeks Bearing Bonds | Business | Vanity Fair http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010?printable=true1 of 20 5/5/2011 2:27 PMeither praying or napping, but one remained on duty at the guard booth, to greet visitors. He guided me along with seven Greek pilgrims to anancient dormitory, beautifully restored, where two more solicitous monks offered ouzo, pastries, and keys to cells. I sensed something missing, andthen realized: no one had asked for a credit card. The monastery was not merely efficient but free. One of the monks then said the next event wouldbe the church service: Vespers. The next event, it will emerge, will almost always be a church service. There were 37 different chapels inside themonastery’s walls; finding the service is going to be like finding Waldo, I thought.“Which church?” I asked the monk.“Just follow the monks after they rise,” he said. Then he looked me up and down more closely. He wore an impossibly long and wild black beard,long black robes, a monk’s cap, and prayer beads. I wore white running shoes, light khakis, a mauve Brooks Brothers shirt, and carried a plasticlaundry bag that said eagles palace hotel in giant letters on the side. “Why have you come?” he asked.How on earth do monks wind up as Greece’s best shot at a Harvard Business School case study? I workup the nerve to ask.That was a good question. Not for church; I was there for money. The tsunami of cheap credit that rolled across the planet between 2002 and 2007has just now created a new opportunity for travel: financial-disaster tourism. The credit wasn’t just money, it was temptation. It offered entiresocieties the chance to reveal aspects of their characters they could not normally afford to indulge. Entire countries were told, “The lights are out,you can do whatever you want to do and no one will ever know.” What they wanted to do with money in the dark varied. Americans wanted to ownhomes far larger than they could afford, and to allow the strong to exploit the weak. Icelanders wanted to stop fishing and become investmentbankers, and to allow their alpha males to reveal a theretofore suppressed megalomania. The Germans wanted to be even more German; the Irishwanted to stop being Irish. All these different societies were touched by the same event, but each responded to it in its own peculiar way. Noresponse was as peculiar as the Greeks’, however: anyone who had spent even a few days talking to people in charge of the place could see that. Butto see just how peculiar it was, you had to come to this monastery.Beware of Greeks Bearing Bonds | Business | Vanity Fair http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010?printable=true2 of 20 5/5/2011 2:27 PMQ&A: Michael Lewis talks about the banks that brought down Greece.I had my reasons for being here. But I was pretty sure that if I told the monk what they were, he’d throw me out. And so I lied. “They say this is theholiest place on earth,” I said.I’d arrived in Athens just a few days earlier, exactly one week before the next planned riot, and a few days after German politicians suggested thatthe Greek government, to pay off its debts, should sell its islands and perhaps throw some ancient ruins into the bargain. Greece’s new socialistprime minister, George Papandreou, had felt compelled to deny that he was actually thinking of selling any islands. Moody’s, the ratings agency,had just lowered Greece’s credit rating to the level that turned all Greek government bonds into junk—and so no longer eligible to be owned bymany of the investors who currently owned them. The resulting dumping of Greek bonds onto the market was, in the short term, no big deal,because the International Monetary Fund and the European Central Bank had between them agreed to lend Greece—a nation of about 11 millionpeople, or two million fewer than Greater Los Angeles—up to $145 billion. In the short term Greece had been removed from the free financialmarkets and become a ward of other states.That was the good news. The long-term picture was far bleaker. In addition to its roughly $400 billion (and growing) of outstanding governmentdebt, the Greek number crunchers had just figured out that their government owed another $800 billion or more in pensions. Add it all up and yougot about $1.2 trillion, or more than a quarter-million dollars for every working Greek. Against $1.2 trillion in debts, a $145 billion bailout wasclearly more of a gesture than a solution. And those were just the official numbers; the truth is surely worse. “Our people went in and couldn’tbelieve what they found,” a senior I.M.F. official told me, not long after he’d returned from the I.M.F.’s first Greek mission. “The way they werekeeping track of their finances—they knew how much they had agreed to spend, but no one was keeping track of what he had actually spent. Itwasn’t even what you would call an emerging economy. It was a Third World country.”As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turntheir government into a piñata stuffed with fantastic sums and give as many