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Thomas Piketty: “Germany has never repaid.”

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

#191

Post by tsotha »

HSO wrote: 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…

A little nationalism is healthy for a country, though I grant too much is a problem.

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

#192

Post by tcbawo »

peterfirefly wrote: post #160
vegabook wrote: post #103

Earlier quoted context omitted.

Pikkety's case is essentially that debt is not sacrosanct, and that treating it as you are is counterproductive. Sometimes the creditor must share some of the pain, in order to save (even himself) more pain down the line.

They did. They took a hefty haircut of more than 50% (some sources say 70+%) in exchange for near certainty of getting paid, i.e. basically the rest of the EU taking over the remaining debt.

I'm interested in the source(s) for these numbers, if you have them.

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

#193

Post by vacri »

csallen wrote: post #174
vacri wrote: post #29

This guy is a reknowned economist? He's conflating "war reparations" with "external debt", and also seems to have missed the big fanfare recently when Germany paid the last of it's WWI reparations - instead he claims they never paid any WWI or WWII reparations. Similarly, 'England took 100 years to repay' he claims as the way forward, yet ignores that Germany took 92 to pay their WWI debt[1]. Not hard, I guess, since…

> He's conflating "war reparations" with "external debt" War reparations are a type of debt. The terms aren't mutually exclusive. Nor is Piketty saying they are the exact same thing. I fail to see your point here. > instead he claims they never paid any WWI or WWII reparations. Where did he say never paid "any"? He very clearly outlines two methods of eliminating debt, and makes the case that Germany used the very me…

> The terms aren't mutually exclusive.

'Conflate' doesn't mean that the terms are supposedly mutually exclusive.

> Nor is Piketty saying they are the exact same thing.

The only example of 'external debt' Piketty is talking about is war reparations. There is nothing else suggested there - it's all war reparations. That's not the same kind of debt as the debt that Greece faces.

War reparations are an arbitrary debt anyway, only paid by losers. Where are the war reparations the US is paying Iraq for storming in and destroying everything? Germany doesn't shoulder sole responsibility for WWI; they simply lost, so the other guys got to demand payment. It's not like Germany exchanged that debt for goods or services rendered, living beyond their means. And even when the war reparations were being decided on, there were plenty of people on the victor's side saying "whoah, this is ridiculous!".

What does it mean to be accused of 'not paying your debts' when even people on the other side are calling for the arbitrary punitive measures to be smaller?

> Where did he say never paid "any"?

True, he didn't say 'any', but there's still plenty of other problems in what he's saying - such as the timeframes for repayment. And there is zero mention of any of the other political factors involved, such as staving off the Soviets. The situation that postwar Germany is in has little to do with modern-day Greece.

--

Edit: Another thing that doesn't show up on the balance books in the aftermath of a world war is the redrawing of borders. After both world wars, Germany had it's borders redrawn, and disasterously in the case of WWII. Also, in addition to the financial debt from war reparations, after WWI, Germany had it's colonial holdings stripped.

Neither of these two things are anything like what's happening in Greece at the moment.

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

#194

Post by JamesBarney »

sdenton4 wrote: post #173

This all reminds me of what we've learned about forest management. You see, for a long time we thought that all forest fires were bad, and set out to extinguish fires whenever even a small one broke out in a forest. After a few decades of almost no fire, a huge amount of burnable debris collected in the forests, and now, when fires break out, they're gigantic and far, far more damaging than normal forest fires. Likew…

Hey sdenton,

I agree with a lot of what you say about how Greece needs it's own currency to inflate, but sometimes I don't know if someone has a non-mainstream opinion or just needs a little help with consensus economics. So if you are like me a student of economics this post will hopefully help clear some things up. If not then I guess we disagree and the next person to read this post will have a better understanding of the different views of monetary policy present in economics :).

The consensus view in economics about issuing bonds is that it moves the needle away from inflation and towards deflation. Think of money in a very simple supply and demand model. More (supply)money means it is worth less. When the government issues bonds it auctions them off and takes money from people(out of circulation) in return, reducing the supply of money. This leads to less money, which is worth more(deflation, or disinflation).

The consensus view about lowering interest rates is that it leads to inflation. Imagine a country with a long term interest rate of 10%, then the FED turns the dial down to 0%. Vick the VC, previously had to average 10%+ on all of his start up investments because investors would move their money to banks(and make 10%) if he made less. So Vick previously only invested in the best start ups, all ex-googlers and previous entrepreneurs. But now he only needs to break 0%, so he invests in all the maybes. This leads to more start ups and more dev positions. Now if we go back to supply and demand, more openings(demand) means greater price. This same things happens across the entire economy. Many projects/start ups/buildings get funded that weren't before because of the drop in interest rate. And these projects create openings, leading to higher wages. Since labor composes most of the goods and services we consume, when we pay more labor, we pay more for good and services call it inflation.

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

#195

Post by cb18 »

return0 wrote: post #134
HSO wrote: 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…

You are not wrong, nationalism is making a big comeback in aging europe.

The subject of nationalism in Europe had already been brought up, and I responded in kind. If you don't want to talk about it that's fine, don't. I understand, it is a potentially uncomfortable subject. But don't try to shy away from the facts and bury your head in the sand with downvotes. As I said the topic was already brought up, this is not off topic or violating HN guidelines, to downvote simply because it makes you uncomfortable is breaking protocol.

http://foreignpolicy.com/2015/02/23/from_the_welfare_state_t...

“In the past we’ve had issues with perhaps a dozen [Jihadists] over a span of several years, but now there’s suddenly hundreds joining ISIS in a short time period. And the growth curve is trending upwards,” says SÄPO spokesperson Johan Sjöö. http://swedenreport.org/2015/03/23/sweden-facing-systemic-co...

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

#196

Post by oh_sigh »

HSO wrote: 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…

I think this is implicit in Pikettys argument.

e.g. from the article:

> But despite this, the younger generation of Greeks carries no more responsibility for the mistakes of its elders than the younger generation of Germans did in the 1950s and 1960s.

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

#197

Post by tcbawo »

tomp wrote: post #90
Mikeb85 wrote: post #51

Earlier quoted context omitted.

> The whole thing is a ponzi scheme. It absolutely is. If you think of money as units of labour instead of 'wealth', it makes more sense. Every year, more people are born, the workforce grows, more things are produced, more food is eaten, etc... The money supply has to reflect that there's always more of everything. This means inflation. And it's not a bad thing.

> The money supply has to reflect that there's always more of everything. This means inflation. And it's not a bad thing. Wait, what?! You don't understand inflation. If there was always "more of everything", the result would be deflation. More food -> food costs less. More cars -> cars cost less. More apartments -> apartments cost less. Economics 101.

Historically, a small amount of inflation has been beneficial. Nobody likes to take a wage cut. Also, even a small amount of deflation quickly makes debt repayment unsustainable. It's hard to repay your loan when you're taking in less money. Greece will never get out of this cycle until it's economy picks up.

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

#198

Post by chvid »

craigyk wrote: post #184
luso_brazilian wrote: post #152

Earlier quoted context omitted.

OK, I'll try to shed some light on why this subject tends to inflame some of the europeans nationalistic sentiment with a concrete example: 1. Meet Portugal (my country). Some may know us derisively as the P in PIGS because of our financial problems (much similar to the Greek one in nature and extent). In 2010 and 2011 as one of the 14 member states of the EU that were part of the Greek loan facility Portugal contrib…

No doubt you should be annoyed, but you should direct most of that ire at the troika than at Greece. The money that went to "bailout" Greece really made its way to EU lenders by way of Greece. A real bailout would have consisted of of policies and loans that went to rebuilding the Greek economy, not toward squeezing every last drop of tax revenue from the few Greeks who are still employed and pay taxes.

That is really not the right way to understand it.

The buying and refinancing of bonds is a very direct support of the Greek economy as the bonds are used by the Greek banks as collateral when they go to the central bank to get cash euros to give to their customers.

Greeks have taken out billions of fresh euro bank notes from their ATMs in the past few months. Without the Troikas support this would not have been possible.

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

#199

Post by chvid »

luso_brazilian wrote: post #152
HSO wrote: 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…

OK, I'll try to shed some light on why this subject tends to inflame some of the europeans nationalistic sentiment with a concrete example: 1. Meet Portugal (my country). Some may know us derisively as the P in PIGS because of our financial problems (much similar to the Greek one in nature and extent). In 2010 and 2011 as one of the 14 member states of the EU that were part of the Greek loan facility Portugal contrib…

Very well said.

And this is why there is little support in the rest of the EU for further transfer of wealth to Greece at this point.

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

#200

Post by mercurial »

TheOtherHobbes wrote: post #141
vacri wrote: post #107

Earlier quoted context omitted.

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 G…

> 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.

Especially with the head tax avoidance manager at his head, Jean-Claude Juncker.

That said, my understanding is that there are real issues with the Greek state - not only cronyism and corruption, but lack of fundamental mechanisms like a proper welfare system or a cadastre. These issues need to be addressed, but seems at odds with the creditors' obsession with slashing public spending at all costs.

I also agree with Piketty about the way the crisis served to highlight systemic issues in the EU. Unfortunately, EU leaders appear completely unwilling to address them, apparently pretending nothing is wrong is much easier.

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