Germany Was Biggest Deadbeat...Not Greece

[bush_cheney2004]

Now here is an interesting take on things....some economists opine that historically, Germany has been a much bigger deadbeat than Greece or any other troubled EU nation. Germany's popular criticism of Greece invites such comparisons.

What the Germans are conveniently ignoring is their own record as one of history's biggest deadbeats.

In the 1920s, according to a prominent German economic historian, Germany was "like Greece on steroids." Albrecht Ritschl, a professor at the London School of economics and an adviser to the German ministry of economics, says that Germany's current prosperity was built on borrowed — mostly American — money, much of it written off.

http://www.cbc.ca/news/world/historically-speaking-germany-a-bigger-deadbeat-than-greece-1.2948158

Should Germany eat the debt just as the Americans and others did for the benefit of the EU ?

Edited February 8, 2015 by bush_cheney2004

[TimG]

Should Germany eat the debt just as the Americans and others did for the benefit of the EU?

The issue is whether Greece is willing to change in ways that eliminate the need for a future bailouts. Greece has defaulted several times in the past and given the current political culture there is no reason to believe it won't happen again in the future. I am fairly certain that if Germany had squandered its gift the US would not have been as forgiving the next time the issue came up. Edited February 8, 2015 by TimG

[bush_cheney2004]

Okay...so why can't Greece do exactly as the Germans and others did/do by monetizing the debt away ? It is little wonder the Greek "optics" on this is so bad for Germany. Maybe Greece should start a world war, kill millions, and all will be forgiven if they just work hard to avoid defaults. As noted in the article, Germany didn't pay off even the watered down post WW2 debt until 2010.

[TimG]

Okay...so why can't Greece do exactly as the Germans and others did/do by monetizing the debt away?

Because they have a shared currency that only has the value it does have because of the reputations of the larger members like Germany. If the Greeks want to do this they should leave the Euro and give up the benefits of sharing a currency with countries that have a better reputation. If they want to stay in the Euro they need to abide by the rules. I see it as a reasonable choice. No one is forcing the Greeks to keep the Euro and the world would not end if they left (but I suspect the economic chaos that would follow would make the Greeks wish they had listened to the Germans). Edited February 8, 2015 by TimG

[bush_cheney2004]

Those stark choices are being met with a third way that stretches out the debt payments. If only for practical political reasons , Greece cannot adhere to severe austerity measures any more than post-war Germany could.

[TimG]

Those stark choices are being met with a third way that stretches out the debt payments. If only for practical political reasons , Greece cannot adhere to severe austerity measures any more than post-war Germany could.

I am inclined to agree. But as someone who rightly criticizes Canada for not appreciating how Canada benefits from the US security umbrella you should understand why the Germans think the Greeks should appreciate how they benefit from lower Euro borrowing costs because of the reputation of Germany.

[bush_cheney2004]

I am sure the Germans feel exactly that way, but why should the rules change...back to following the rules now. Here is the popular Greek position:

Syriza, Greece's new ruling party, makes an attractive argument for writing off Greek debt: Wasn't Germany, now the biggest opponent of debt relief, itself the recipient of unprecedented largesse in 1953, when its foreign debt was halved? Attractive, however, doesn't mean convincing. Parallels between today's Greece and 1953 Germany are demagoguery, pure and simple.

The Federal Republic of Germany's creditors -- 20 countries including Greece -- indeed agreed at a London conference to write off 55 percent of the country's 32.3 billion Deutsche marks of foreign debt. "More than 50 percent of Greek debt needs to be written off," says top Syriza economist John Milios. "The solution that was given to Germany at the London conference in 1953 is what we must do for Greece.”

http://www.bloombergview.com/articles/2015-01-27/germany-deserved-debt-relief-greece-doesn-t-i5fdca2y

[eyeball]

You do realize you're basically suggesting a Kombiya approach.

Would this have worked in Germany back in the 20's? Was it ever suggested and if so who nixed it and why?

[TimG]

"The solution that was given to Germany at the London conference in 1953 is what we must do for Greece."

The difference is Germany had its own currency at the time. If Greeks leave the Euro it will default on the loans and the debts will be written off. No one is preventing the Greeks from making this choice. The only choice which is closed to them is staying in the Euro and having the debts written off.

[bush_cheney2004]

Greek creditors can still get a haircut without Greece leaving the Euro.

[TimG]

Greek creditors can still get a haircut without Greece leaving the Euro.

You are the one trying to draw historical comparisons and saying Greece should get the same deal as Germany. I am saying that basic deal is available to Greece but you seem to think Greece should be entitled to a better deal than what Germany got (i.e. Greece should get its debts written off AND remain part of a currency union where it benefits from the reputations of the larger members). Edited February 8, 2015 by TimG

[bush_cheney2004]

You are the one trying to draw historical comparisons and saying Greece should get the same deal as Germany. I am saying that basic deal is available to Greece but you seem to think Greece should be entitled to a better deal than what Germany got.

I haven't taken a position either way....Greece can't get the same deal that Germany did.

My reason for posting the comparison is to demonstrate why some Greeks feel the way they do.

Germany also continued to benefit after default.

Edited February 8, 2015 by bush_cheney2004

[bush_cheney2004]

Have-not EU nations may rally to support Syriza's position:

Contrary to many reports, Syriza is not threatening a unilateral default but wants Greece’s debt burden to be considered within a broader restructuring of sovereign debt in the euro zone. Its leader, Alexis Tsipras, has called for a “European Debt Conference”, based on the 1953 London Conference that wrote off half of post-war Germany’s debt and extended the repayment period for the rest over a number of decades. As Hans-Werner Sinn, one of Germany’s leading economists and president of the Ifo Institute for Economic Research, acknowledged recently, the 1953 conference was, along with the Marshall Plan, a key factor in enabling Germany’s post-war economic miracle.

http://www.irishtimes.com/opinion/why-ireland-should-support-greek-plan-to-write-down-euro-zone-public-debt-1.2060653

Edited February 8, 2015 by bush_cheney2004

[Argus]

Greek creditors can still get a haircut without Greece leaving the Euro.

Greek creditors have already gotten a pretty damned severe haircut.

[overthere]

Those stark choices are being met with a third way that stretches out the debt payments. If only for practical political reasons , Greece cannot adhere to severe austerity measures any more than post-war Germany could.

Sure they can adhere to the austerity measures. The most onerous one is that ordinary Greeks have to pay income tax to the central government on their earnings. The place is rife with tax dodgers, in the past only fools and civil servants paid their share.

Greece has been living in cuckoo-land fiscally for generations. That is over.

Greece cannot leave the Euro. if they did, their current situation would instantly be the good old days. The drachma would be utterly worthless, which means any imports to Greece would be completely unaffordable. Medicine, oil, any kind of machinery or aircraft parts- they could not buy anything from anybody because their money would not have the value of toilet paper. And that would be overnight. They know this, their new govt is just posturing and preening for domestic consumption. Their exports would be more valuable, but they don;t export much that matters. In short, Greece would be terminally f***ed if they left the EU and the Euro.

So why does Germany prop up the deadbeats like Greece? Simple: because Chermany is an exporting country and it is very very much in their self interest to have a moderately costed Euro currency. If they left the Euro, the value of the new deustchmark would be so high nobody could afford their exports, They don't prop Greece up out of compassion, it is all about the money.

[overthere]

Have-not EU nations may rally to support Syriza's position:

Contrary to many reports, Syriza is not threatening a unilateral default but wants Greece’s debt burden to be considered within a broader restructuring of sovereign debt in the euro zone. Its leader, Alexis Tsipras, has called for a “European Debt Conference”, based on the 1953 London Conference that wrote off half of post-war Germany’s debt and extended the repayment period for the rest over a number of decades. As Hans-Werner Sinn, one of Germany’s leading economists and president of the Ifo Institute for Economic Research, acknowledged recently, the 1953 conference was, along with the Marshall Plan, a key factor in enabling Germany’s post-war economic miracle.

http://www.irishtimes.com/opinion/why-ireland-should-support-greek-plan-to-write-down-euro-zone-public-debt-1.2060653

Ya ya whatever. Hans-Werner doesn't make the decisions in Chermany or the EU, Angela Merkel does makes them and she doesn't give a stuff about ancient history or sentiment.

Greece is looking for allies to put pressure on the more solvent countries in the EU. Big Whoop. Tsipras is desperate, every door he's tried to open since vastly overpromising during the Greek election is slammed shut. Others are rusted shut. Welcome to reality Alexis.

Now STFU and get your country in order without all the grandstanding. Nobody is interested in your revolution.

[Michael Hardner]

Greek creditors have already gotten a pretty damned severe haircut.

I thought so, too, though I read somewhere they they hadn't.

This says they have:

Meanwhile the necessity of another reduction is clear. In September 2010 the IMF reported “total Maastricht debts” of 307.5 billion euros for 2010. Two “rescue” packages so far totalled 240 billion euros, the haircut of private creditors was some 100 billion euros.

http://fsbwatch.org/debt-and-fsb/imf-greek-debt-write-off.html

[Topaz]

Perhaps some of you who read this may change your mind on Greece and the rest of the European countries with money problems. They had help getting there and as usual the US in the the middle of this...to drive down the Euro and save the US $. http://www.globalresearch.ca/greeces-debt-overhang-looted-by-wall-street-and-the-european-central-bank/5430005

Edited February 8, 2015 by Topaz

[overthere]

Perhaps some of you who read this may change your mind on Greece and the rest of the European countries with money problems. They had help getting there and as usual the US in the the middle of this...to drive down the Euro and save the US $. http://www.globalresearch.ca/greeces-debt-overhang-looted-by-wall-street-and-the-european-central-bank/5430005

every large economy has an influence on the relative value of their own and other currencies, but ultimately the value of a currency is simply what others perceive it to be.

"Save the US $".

What are you talking about?

Oh, and the site you linked to is run by partisan leftoid mongs.

Edited February 9, 2015 by overthere

[Argus]

Perhaps some of you who read this may change your mind on Greece and the rest of the European countries with money problems. They had help getting there and as usual the US in the the middle of this...to drive down the Euro and save the US $. http://www.globalresearch.ca/greeces-debt-overhang-looted-by-wall-street-and-the-european-central-bank/5430005

The problems the Greeks have is that it's full of Greeks.

This is not the fault of the Americans.

Greeks are left of center and like lots of government services. However, unlike the Nordic people, they want others to pay for those services, and avoid taxes like the plague. Endemic black markets and corruption starved the Greek government of funding for decades, so they simply borrowed the money in order to provide the services Greeks wanted.

[Bob Macadoo]

The problems the Greeks have is that it's full of Greeks.

This is not the fault of the Americans.

Greeks are left of center and like lots of government services. However, unlike the Nordic people, they want others to pay for those services, and avoid taxes like the plague. Endemic black markets and corruption starved the Greek government of funding for decades, so they simply borrowed the money in order to provide the services Greeks wanted.

They're the black/native/muslim of the eurocentric...am I right?

[On Guard for Thee]

Yeah Id say it sounds like a familiar groove.

[bush_cheney2004]

German banking for Greece and Europe....Nazi style:

http://truth-out.org/news/item/27261-germany-s-unpaid-debt-to-greece-albrecht-ritschl-on-germany-s-war-debts-and-reparations#

[Boges]

In the 1920's and 30's Germany was under extraordinarily punitive sanctions over WW2 through the Treaty of Versailles.

They actually got out of the Great Depression quicker than under nation. Granted due to the authoritarian nature of the Nazis.

Edited February 9, 2015 by Boges

[-TSS-]

The Greek exit from the euro is inevitable. The later they leave it the more painful it will be. Had they done it already in 2010 they would by now be on a growth path.