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Thomas Piketty: “Germany has never repaid.”

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

#31

Post by adventured »

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…

It's interesting that Piketty is advocating perpetual debt slavery for the people he pretends to champion the most: the non-rich.

It's not the 0.1% that need worry about nations taking on ever increasing debt burdens, and the pressure the interest puts on budgets (including entitlement and welfare systems). It's everyone else that will be crushed by it.

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

#33

Post by subpixel »

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…

DER SPIEGEL lacks quality? Would you care to back that up? It's one of the most respected publications in Europe, with excellent investigative reporting.

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

#34

Post by netcan »

It actually reads to me that he is saying something quite similar to what I have been thinking recently: countries go bankrupt, we need a bankruptcy court/procedure for governments.

The US needs it for its bankrupt local governments. The EU needs it for member states.

The rationale behind bankruptcy is this: if a borrower cannot repay their debts in full, the lender cannot receive them in full. This isn't negotiable. It's an artefact of reality. Given that the lender will not receive their payment in full, it makes sense we may as well have a process that acknowledges this fact and moves things forward. There is no point to debtors prisons. Debt means risk and if bankruptcy happens, that risk plays out.

The current Greek situation is exactly that. The troika cannot receive its repayments in full. Greece simply cannot repay them. It's not marginal. It's not possible if only Greece would... It's not going to happen. They owe too much and their economy is in collapse. It is game over for these loans.

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

#35

Post by sdenton4 »

adventured wrote: post #13

"The second method is much faster. ... Essentially, it consists of three components: inflation, a special tax on private wealth, and debt relief." So Piketty is advocating a special tax on the poor. The group of people that can least deal with inflation, with no ability to shift assets or income to avoid it, nor deal with the increased cost of goods in relation to their debased incomes.

Qua? A 'special tax on private wealth' would presumably be a progressive tax, rather than a tax on the poor. And the tax would presumably be distributed amongst the richer countries of the EU to forgive the debt of the poorer country (Greece, in this case).

Meanwhile, inflation has been kept in check for many many years by the manipulation from central banks. Who does inflation hurt? Well, turns out it hurts people sitting on top of big piles of money, as their pile of money is worth relatively less. So generally, capitalists don't like inflation because it hurts their capital.

Inflation can also hurt the poor if their wages aren't on track with inflation, as has been the case in the US for quite a long time. Annual raises are supposed to offset the effect of inflation, though: The morale of the story is that if you have a politically weak labor sector, the 'cost' of inflation can be transferred from owners to workers. But on the whole, the main impact of inflation should be on the big piles of money, rather than the people with none.

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

#36

Post by cm2187 »

adventured wrote: post #31
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…

It's interesting that Piketty is advocating perpetual debt slavery for the people he pretends to champion the most: the non-rich. It's not the 0.1% that need worry about nations taking on ever increasing debt burdens, and the pressure the interest puts on budgets (including entitlement and welfare systems). It's everyone else that will be crushed by it.

It might not be the 0.1% but it is certainly the 10% or 20% that should worry. Savings and pensions will be wiped out. One can find comfort in physical assets (property, gold) but the history of Europe and of the US tells us that it is easy to get expropriated (all property in the communist bloc, gold in the US, property in Germany after the war, etc...).

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

#37

Post by Confiks »

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…

You seem to place an awful lot of value on the cause of debt being war. The interview gives no indication that Piketty would be unable to grasp the difference of the Greek and post-war German situation. That this "boggles the mind" seems to be a bit disingenuous.

Also, the 2008 crisis isn't the direct cause of the crisis in Greece right now. That crisis has been building ever since Greece joined the monetary union in 2002. As Piketty notes: "The Greeks have, without a doubt, made big mistakes. Until 2009, the government in Athens forged its books". Papandreou finally revealed this (indeed, around 2008), and the current Greek crisis and European monetary instability followed suit.

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

#38

Post by caskance »

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…

If you are willing to accept payment in land, it's quite easy.

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

#39

Post by Mikeb85 »

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 initial creditors, and convinced the then-current Greek government to take a bad deal, all the while basically 'socializing' the risk. Their shitty economics led to a 25% contraction in the Greek economy.

If you follow the chain of events, this crisis is as much Germany's fault as Greece's.

Another thing to keep in mind, is that it doesn't matter whose fault it is. If Greece stops paying its creditors and stops taking loans, Germans will lose out. It's actually in Germany's best interest to forgive some of the debt, and have Greece pay the rest. Greece's economist/finance minister knows this, that's why they can play this game.

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

#40

Post by minot »

vruiz wrote: post #26
adventured wrote: post #13

"The second method is much faster. ... Essentially, it consists of three components: inflation, a special tax on private wealth, and debt relief." So Piketty is advocating a special tax on the poor. The group of people that can least deal with inflation, with no ability to shift assets or income to avoid it, nor deal with the increased cost of goods in relation to their debased incomes.

How do you go from "tax on private wealth" to "tax on the poor"?

Inflation is tax on the poor.
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