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Thomas Piketty: “Germany has never repaid.”

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

#61

Post by ubernostrum »

minot wrote: post #28

The countries that were the Allied powers are in no position to call out Germany for not repaying its debts after the second world war because they originated from the way the Allied powers handled the money situation during and after the Great War. Look at this quote: > We cannot demand that new generations must pay for decades for the mistakes of their parents. The Greeks have, without a doubt, made big mistakes. U…

However, the Greeks must realize a compromise consists of a give and take.

OK, how much more would you like them to give? Another 20% of GDP? 30%? 40%? 50%? Since it's apparent that the goal is to squeeze blood from a stone, just how much blood would satisfy you?

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

#63

Post by nostromo »

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'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.

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

#64

Post by GeneralMayhem »

vacri wrote: post #52
jsprogrammer wrote: post #41

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. 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.

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

#65

Post by tomp »

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…

The underlying assumption in the German "NO" to Greek pleas of debt relief is the "moral hazard" of writing off a country's debt just because they cried really hard.

Why don't we talk about the moral hazard of writing off a country's debt after they kill 60 million people?

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

#66

Post by lancewiggs »

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 bigger problem for the world, and the lending institutions.

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

#67

Post by tptacek »

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…

The stats I can find suggest Greece ran a primary deficit pretty consistently starting in 2002 --- long before the crisis --- in fact, they appear to have run a primary deficit during the boom years that preceded the crisis.

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

#69

Post by bedhead »

Sovereign debt is inherently unsecured. It's a credit card for the government, nothing more. The primary motivation for servicing the debt is that it will enable more borrowing. And like people, countries don't pay off their debts for all sorts of reasons...not every default is created equally. At the least, Piketty is being intellectually dishonest. Personally, I think he is really just trying to appeal to the underdog by pointing out this poor analogue.

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

#70

Post by Mikeb85 »

tptacek wrote: post #67
Mikeb85 wrote: post #39

Earlier quoted context omitted.

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…

The stats I can find suggest Greece ran a primary deficit pretty consistently starting in 2002 --- long before the crisis --- in fact, they appear to have run a primary deficit during the boom years that preceded the crisis.

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.
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