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Thomas Piketty: “Germany has never repaid.”

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Re: Thomas Piketty: “Germany has never repaid.”

#91

Post by hackuser »

Mikeb85 wrote: post #77
nostromo wrote: post #63

Earlier quoted context omitted.

I'd draw a distinction between debts incurred by a democratically elected government and otherwise. I also think reparations are fundamentally different than loans. Comparing war reparations to loans is blurring the lines to make a political point.

Think of it like this: when a country needs to 'borrow', they're selling bonds. An investment vehicle. If you buy bad bonds as a typical investor, no one bails you out - you lose your investment. That's how it should have gone for Greece. Their 'investors' should have lost during the crisis, like everyone else, instead the Euro governments bailed them out and created this prolonged mess...

That ingores the impact on the poor and pensioners of Greece. Just let them starve?

Re: Thomas Piketty: “Germany has never repaid.”

#92

Post by tomp »

cm2187 wrote: post #3

If you believe Piketty, debt is never meant to be repaid and no one should therefore ever invest in sovereign debt. That would solve the debt debate. No creditor = no need to worry about whether we want to pile more debt. And he has a point. I personally don't believe that any of the US, Japanese and European sovereign debt will ever be repaid. The whole thing is a ponzi scheme. Investors hope that their investment w…

That's not a problem for as long as you can print money (and are willing to suffer from high inflation).

Re: Thomas Piketty: “Germany has never repaid.”

#93

Post by eli_gottlieb »

jsprogrammer wrote: post #41
sgnelson wrote: post #21

This makes me lose respect for Piketty. There's a very clear difference between a country that comes out of two world wars, with everything all but destroyed, including millions dead. I'm sorry, no matter how bad 2008 was, it was no World War. His inability to grasp this just boggles the mind. There's a very big difference between war caused debt and economic caused debt (note that I'm basically making these two "deb…

>There's a very clear difference between a country that comes out of two world wars, with everything all but destroyed, including millions dead. Which allows us to provide a further distinction: the country who had everything destroyed was directly responsible for that destruction. Yet, the debt that they racked up because they tried to take over eurasia while killing and torturing millions in the process, was forgiv…

>I think there should be a distinction between a country that kills and tortures millions and one that does not. So, why again should we forgive the debts of those responsible for killing and torturing millions, but not those of a country who has done nothing comparable?

Because the Treaty of Versailles was tried the first time, to penalize Germany with onerous debts for starting WW1, and WW2 was the direct result. After WW2, the Allied occupiers weren't thinking, "How can we penalize Germany?", they were thinking, "How can we prevent another damned war!?".

Unfortunately, this time people are still thinking, "How can we penalize Greece?", as if that will help the EU at all in the future.

Re: Thomas Piketty: “Germany has never repaid.”

#94

Post by netcan »

Mikeb85 wrote: post #39
sgnelson wrote: post #21

This makes me lose respect for Piketty. There's a very clear difference between a country that comes out of two world wars, with everything all but destroyed, including millions dead. I'm sorry, no matter how bad 2008 was, it was no World War. His inability to grasp this just boggles the mind. There's a very big difference between war caused debt and economic caused debt (note that I'm basically making these two "deb…

When Greece borrowed money, it was sustainable. Their GDP was growing, in large part because the European economy was growing before the crisis. When the European and world economy went down, it dragged Greece with them. The debt became unsustainable. Instead of the creditors losing out (much as an investor or normal creditor would when they invest in something that loses), the Europeans decided to bail out the initi…

This is a super important point. One that needs to come into the debate in Germany more.

Greece may have been run by a ridiculously irresponsible government (and electorate), but it was the troika (Germany, mostly) put the fallout on the German (and EU) public's tab. That was and is a debt guaranteed to go bad.

Re: Thomas Piketty: “Germany has never repaid.”

#95

Post by vacri »

GeneralMayhem wrote: post #64
vacri wrote: post #52

Earlier quoted context omitted.

> I think there should be a distinction between a country that kills and tortures millions and one that does not. There isn't a major economy in the world that this does not describe. Perhaps not India. The "Race for Africa" was a low point for the UK and France, for example.

They can still claim some moral high ground in that, were they to go bankrupt today, colonialism was not directly the cause. That's not the case with Germany in the 40s/50s.

The debt forgiveness of Germany post-WWII shouldn't just be seen as altruism. The Soviet Bear was seen as a major threat by the Allies, and having a healthy buffer state was a significant factor in making policy around West German finances.

If Greece was a buffer state against some monstrously powerful ideological opponent, you can bet that we'd be seeing considerably different politicking going on.

Re: Thomas Piketty: “Germany has never repaid.”

#96

Post by kchoudhu »

PuercoPop wrote: post #23
obblekk wrote: post #10

There's one way in which Picketty is right: it's impossible to force a country to repay their debt. After WW1 France tried first through international (England) enforcement bodies, and then ultimately by occupation of the Ruhr valley (Germany's most productive region then). Both approaches failed. Eventually the Weimar inflated their currency until the French debt was worth nothing, workers in the Ruhr valley striked…

There are ways. See the case of Argentina.

To the best of my knowledge, they haven't repaid. Their access to capital markets is very inconvenient right now -- but they haven't repaid.

Re: Thomas Piketty: “Germany has never repaid.”

#97

Post by Mikeb85 »

tptacek wrote: post #75
Mikeb85 wrote: post #70

Earlier quoted context omitted.

A deficit isn't necessarily unsustainable over a period of economic growth. If growth and inflation outpace the cost of borrowing, it's worthwhile to borrow. Kind of like the US is doing right now.

That's a good point, but the obvious next Google search suggests that Greece's economic growth was unspectacular during the early 00s, and began lagging in '06.

http://www.tradingeconomics.com/greece/gdp

Greece's GDP nearly tripled from 2000 to 2008. Their debt to GDP was comparable to other European nations until 2008 (105% of GDP).

Re: Thomas Piketty: “Germany has never repaid.”

#98

Post by sgnelson »

Mikeb85 wrote: post #39
sgnelson wrote: post #21

This makes me lose respect for Piketty. There's a very clear difference between a country that comes out of two world wars, with everything all but destroyed, including millions dead. I'm sorry, no matter how bad 2008 was, it was no World War. His inability to grasp this just boggles the mind. There's a very big difference between war caused debt and economic caused debt (note that I'm basically making these two "deb…

When Greece borrowed money, it was sustainable. Their GDP was growing, in large part because the European economy was growing before the crisis. When the European and world economy went down, it dragged Greece with them. The debt became unsustainable. Instead of the creditors losing out (much as an investor or normal creditor would when they invest in something that loses), the Europeans decided to bail out the initi…

Yes. I should have added, it's not that I don't have sympathy for Greece and how their debt has been structured. I also don't think Europe should let them fall. It's also not that I don't think Piketty is correct in some of his solutions (though I have differences of opinion with some of them), I just found his reasoning to be wrongheaded and somehow "dumb." At least for someone who is supposed to be a great world economist. (My own take away should be "Don't believe the hype.")

Re: Thomas Piketty: “Germany has never repaid.”

#99

Post by mrottenkolber »

eseehausen wrote: post #17
mrottenkolber wrote: post #7

The interviewer completely oversteps his boundaries here. In case anybody wonders: "Die Zeit" is Germany's tabloid version of a politics paper (similar in lack of quality to "Der Spiegel"). This interview illustrates whats wrong with these tabloids very clearly: Bias, ignorance and uneducated employees. Piketty brings up some good points but the interview is painful to read, like dragging a wet mattress up a stairwel…

It seemed to me that the interviewer was setting up the popular German objections so that Piketty could knock them down rather than actually believing those pretty naive arguments. Or is that the issue you have with it in the first place?

Good point. Still, I would prefer a coherent dialogue instead. I feel like debunking uninformed objections gives those objections more recognition then they deserve. I wish for smarter or at least less stale questions.

Re: Thomas Piketty: “Germany has never repaid.”

#100

Post by Mikeb85 »

hackuser wrote: post #91
Mikeb85 wrote: post #77

Earlier quoted context omitted.

Think of it like this: when a country needs to 'borrow', they're selling bonds. An investment vehicle. If you buy bad bonds as a typical investor, no one bails you out - you lose your investment. That's how it should have gone for Greece. Their 'investors' should have lost during the crisis, like everyone else, instead the Euro governments bailed them out and created this prolonged mess...

That ingores the impact on the poor and pensioners of Greece. Just let them starve?

They wouldn't starve. Many countries have survived a default without people starving. Presumably, in the case of a Greek default, the government would be using the money to pay pensioners and give welfare instead of paying bond-holders...
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