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Thomas Piketty: “Germany has never repaid.”

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

#141
post #107

Earlier quoted context omitted.

>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. A…

But they are thinking "how can we prevent this again?" with respect to Greece - for example measures against corruption, unaffordable levels of welfare, and high tax avoidance. Without those measures, if they just hand over money with no strings attached, it will just be kicking the can down the road.

No, they're thinking "How much money can we rescue tomorrow."

And that's all they're thinking.

Piketty is right - it's atrategic idiocy of the first order.

As for tax avoidance - some countries, including the UK, have based significant sectors of their economy on tax avoidance.

In the same way that it's immensely hypocritical of Germany to lecture Greece on debt, it's equally hypocritical of the Eurozone to lecture Greece on tax avoidance, when the bankers and corporates know damn well that if they weren't avoiding taxation at least as aggressively, austerity would be completely unnecessary.

But of course they mean tax avoidance by working class people, which is a very bad thing, and not tax avoidance by corporations, banks, and oligarchs, which is a very good thing.

It's this kind of twisted self-serving nonsense that has created the situation in Greece. Sovereign debt is a symptom of much deeper problems, not a final cause.

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

#142

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.

Which reminds me...

https://en.wikipedia.org/wiki/Greek_Civil_War

158,000 killed due to those bloody stupid Communists :(

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

#143

Earlier quoted context omitted.

>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'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.

The Nazi government was more or less democratically elected, at least as much as Greece's government.

Germany had loans forgiven less than one decade after they were systematically killing tens of thousands of people per day in gas chambers, human ovens, or worse and barely twelve years after they had firebombed London and other cities, resulting in 40,000 dead civilians.

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

#144

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…

(I am not an expert on anything.)

It's probably a bit unfortunate that this Piketty interview is getting prominence, because the whole question of analogies or disanalogies to Germany's war-related sovereign debt problems is mostly beside the point. The most urgent disanalogy in Greece's case is to what happens to just about every other country from A to Z that goes broke and needs to enter an IMF program. The SOP is for their pre-existing sovereign debt to be haircut as far as is necessary (if it is necessary) to make their debt burden clearly sustainable from then on, as a central part of the program designed and supervised by the IMF. This is what the IMF was designed to do from Day 1 and no-one, including Germany or any Eurozone core countries, is running around shouting that the IMF system is morally depraved, or a source of unacceptable moral hazard or a surrender to blackmail etc. etc. because it frequently results in program countries defaulting on a large chunk of their sovereign debts. And compared to the rogue's gallery of mostly developing countries that enter IMF programs Greece is probably not exceptionally profligate, corrupt, structurally rigid, unreformable and so on.

Instead Greece was moved onto the special, ad hoc Troika scheme, in which a country with a greatly unsustainable debt burden was given more loans but originally no debt relief at all, and great efforts were made to make the country run primary surpluses so that the creditors would not only get all their money back but make a profit. Greatly inadequate debt relief was only added later on when the original plan had collapsed. I'll let the former head of the Bundesbank explain why:

http://www.spiegel.de/international/germany/former-central-b...

Politically this was a wonder solution for the EU core leadership: bail out their banks by stealth, avoiding the anger of their taxpayers by camouflaging it as a rescue mission for the wayward Greeks. Even better, the whole cost of the EU-wide bank bailout could be sweated out of the Greek taxpayer! Well, not really of course: probably no-one ever expected the official creditors to actually get their money back, but hopefully the defaults would be acceptably far in the future for the politicians, who live hand-to-mouth and election to election. Now that the whole thing has exploded, perhaps sooner and harder than they expected, those EU core politicians are trapped by their earlier lies.

There is one further wrinkle: not only was the Troika fix-up job vastly harsher on Greece as a creditor than a normal IMF program, it was specifically forbidden by the treaty of Lisbon (the solemn document I was asked to vote on twice, as an Irish citizen) articles 123 http://euwiki.org/TFEU#Article_123 and 125 http://euwiki.org/TFEU#Article_125 while at the same time the treaty had been crafted to allow Euro member countries continued access to normal IMF programs while remaining inside the Euro. Or at least, everyone thought that it was specifically forbidden, until this prohibition was no longer convenient, and the wizards at the ECJ (the same visionaries who recently discovered the "right to be forgotten") helpfully made it go away.

But if we do want to talk about the German example, we don't have to go back to the Marshall Plan either. The US Fed's cross-border largesse in 2008 would be a good place to start.

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

#145

The blame here, like the GFC, has to lie with the lenders, who are sophisticated investors making very large profits from loans to unsophisticated or (politically) pressured borrowers. The lenders in this case assumed the loans have sovereign risk, but countries have risk too and judgement day has come. Take your licks, write down the loans so they are repayable and move on. If not then this will likely become a far…

The lenders presumed that Greek debt would always be acceptable to the ECB as collateral, and thus would always be worth face value. This analysis of ECB collateral policy proved correct. The blame, then, lays in the policies and signals of the ECB, which were transparently dictated by the political urgency of keeping Greece in the Euro.

Had the Eurozone and the ECB adhered strictly to their budget rules, and penalized departures through ECB collateral policy, we'd be in a very different place. Of course, had those players had used proper accounting and figures, Greece would never have been qualified for the euro in the first place.

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

#146
post #110

Earlier quoted context omitted.

Greece has a new government. One that has no connection with either the thieves that caused the problem in the first place nor the incompetent idiots that didn't solve it in the last 5 years.

Wikipedia tells me the Greek constitution dates to 1975. Is that wrong?

A constitution under which it is illegal to fire state workers unless by law!

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

#147

Earlier quoted context omitted.

>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'll put it this way. World War I: Germany loses, is forced to pay not just debt, but reparations. Huge economic and political instability as a result leads to a new leadership which leads directly to World War II. World War II: Germany loses, is split up, due to the Marshall plan (in part do to a fear of Communism, so not solely due to compassion), West Germany given millions of dollars to rebuild, a rather thriving…

In other words, Greece should declare war, and get occupied? (It probably would be better for them than what's going to happen). If only there was a way to resurrect Marshall and Ike, and make them dictators over Greece…

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

#148

Earlier quoted context omitted.

>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. Which reminds me... https://en.wikipedia.org/wiki/Greek_Civil_War 158,000 killed due to those bloody stupid Communists :(

Here's another take on it:

[1]"As the war’s outcome became apparent, British Prime Minister Winston Churchill was determined to return Greece to the prewar rule of the monarchy and the old regime. He was motivated by fear of Communist influence within the resistance movement.

Churchill tried to get the Anglo-American army that was getting ready to invade Italy to attack Greece instead. Indeed, he tried so hard to change the war plan that he almost broke up the Allied military alliance; when he failed, he threw all the soldiers he still controlled into Greece and precipitated a civil war that tore the country apart."

[1] http://www.democraticunderground.com/10026942363

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

#149
post #59

At the risk of being a moralizing bore, may I remind everybody that "Germany", "Greece" etc. are not people, and that people are not countries? I am surprised by the national coloring, however faint, of some comments here and there https://news.ycombinator.com/item?id=9834721 . "I am a German" or "Greek here" should have no relevance to the ideas put forth. "Your money" and "your banks" are not really "my money" and…

> Game theory tells us that incentives and constraints can get so messed up that developments take on an eigendynamic which was nobody's intent nor interest.

You don't need game theory of this, you just need history. Game theory is the hammer that thinks every problem is a nail.

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

#150

Earlier quoted context omitted.

>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. A…

And austerity has been shown to be a remarkable failure for any form of economic recovery not just the first, but pretty much every time any country has tried it

Why would you try it on Greece then?

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