5 ms·

>allowing Greek to make their own decisions, Apparently, Greece owes Germany $80+ billion dollars[1]. Of course, if it were up to Greece alone, they'd prefer

by jasode 11y ago

>allowing Greek to make their own decisions, Apparently, Greece owes Germany $80+ billion dollars[1]. Of course, if it were up to Greece alone, they'd prefer to say "just forgive our past loans and let's reset the odometer to 0 for a new set of loans. And oh, btw, don't expect to get paid back on the new loans either since we don't want your input on how to reform our ineffective government to even make payback possible." People want to interfere with Greece because they took lots of other people's money. If a company borrowed money from bond holders and timely payment is not possible, those bondholders can pressure the company to hire their turnaround managers in return for refinancing, or force it into bankruptcy and seize assets. Whether it's a country or a company borrowing other people's money, it's hard to see how a "hands off" policy by the lenders would be possible. [1]http://www.marketwatch.com/story/heres-how-much-greece-owes-germany-others-2015-07-09 http://www.marketwatch.com/story/heres-how-much-greece-owes-...

jacobolus 11y ago
If the US were organized like the EU, several of the states would be heavily indebted and bankrupt, with a third world quality of life, and the financial, industrial, and entertainment centers would be even richer. Instead, richer states transfer huge amounts of money to poorer states through various federal programs (infrastructure spending, assistance to the states, federal welfare programs, etc.), going a long way towards putting citizens on an equal footing everywhere in the nation. The banking system is unified and federally insured, disaster relief is centrally supported, people are free to move around entirely freely as citizenship is handled at the national level. Every state has a comparable seat at the political table. The weaker states in Europe should have never agreed to a currency union without any kind of fiscal or political union. It led to a massive bubble of stupidly cheap debt and speculative capital inflow, and then when the economy started looking iffy all the money flowed out again, and poof. Losing control of your monetary policy is straightjacket enough when your economy dips, but under the rules of their debt deals, Greece also lost control over fiscal policy, and was forced to apply pro-cyclical cuts to government spending. They ended up in worse-than-great-depression level economic collapse, with absolutely no tools available to deal with it. For Germany by contrast, the Euro has been great (though fiscal austerity in response to a recession was stupid for them too). Their currency has been artificially weak relative to their neighbors, helping them run huge trade surpluses.
- wfn 11y ago
  Agree completely. Not having the ability to inflate one's currency in times of economic struggle (so that exports are made to be cheaper, etc.) is not the best thing; while for Germany it helps with their own exports. Moreover, lots of Greek debt (IIRC) was originally to banks which had lent lots of money without oversight; almost knowing that someone (the EU states) would take over the debt if need be... Of course Greece had borrowed recklessly on their end as well. But I think the analogy and contrast to how US states work is really good. Want a single currency across multiple areas with differing economic performance? OK, but then better have mechanisms for supporting equal footing.
  - forgetsusername 11y ago
    >banks which had lent lots of money without oversight If you sign a legally binding document that you will repay a loan, plus interest, or your assets are on the line, what "oversight" do you need? Wouldn't the world be a better place if people paid money back as contracted, rather than ripping off (and somehow blaming) the lender? If you don't like the terms, don't accept them. "But we need money!" isn't an excuse.
    - Aeolos 11y ago
      No, it wouldn't. Categorically. If everyone repaid debts, then lending money wouldn't require interest. Interest expresses the danger that money may not be repaid as, for example, during bankruptcy proceedings. Debt forgiveness has existed since the dawn of money. See [1] for more information. [1] http://www.amazon.com/Debt-The-First-000-Years/dp/1612191290 http://www.amazon.com/Debt-The-First-000-Years/dp/1612191290
- Shivetya 11y ago
  Well quite a few states are heavily indebted. While many if not the majority have balanced budget rules they and the cities circumvented fiscal responsibility by making out too many promises to government and union retirement programs. That is their real time bomb and quite a few states are/will be in the same boat as Greece when time comes to pay up
erebus_rex 11y ago
In 1953 Germany had half its WWI debt erased to rebuild the country and curtail violent attitudes. Also, Greece did not dig themselves in this hole alone. Its a little telling that so many EU members kept lending to them despite ample signs of fiscal irresponsibility. I agree with the general gist of your argument but you can't treat firms and nations and equals in this case. Greece's problem reflects a deeper concern of international debt structures and the concerns of the union against those of member nations.
- chii 11y ago
  a video i watched (which, i can't for the hell of me, remember the url or name), explained that the difference between the EU and the USA is that of national identity. People in the USA doesn't bat an eye when federal funds are sent to states whose revenue is below the national average. There's no ethos where a 'they' and 'us', unlike in the EU.
  - jessaustin 11y ago
    This is mostly correct, but the dynamic in USA is a bit more complicated. When one compares "donor" states to "recipient" states, by and large the donors are states with a political commitment to expanded federal spending while legislators elected by the recipients at least rhetorically favor curtailed federal spending. The transfers thus amount to a sort of "bribe" that allows spending bills to get through Congress. It's not clear to what extent the "spend less" position is actually a calculated pose to procure more transfers...
    - kpil 11y ago
      I think one reason is there are larger cultural differences, which is also reflected in government efficiency, corruption, and work ethics. In particular, the northern 'ex protestant' nations are hesitant to piss away money on their southern friends. For a lot of reasons.
      - Aeolos 11y ago
TheOtherHobbes 11y ago
Greece was loan-sharked by Germany and other "investors" for the explicit purpose of pumping up German exports and making German shareholders happier. This is not quite the same thing as taking a lot of other people's money. A lot of the money never reached the ground, so most of the Greek people got very little benefit from it. Rather a lot of it went on defence boondoggles. See e.g. http://www.theguardian.com/world/2012/apr/19/greece-military-spending-debt-crisis http://www.theguardian.com/world/2012/apr/19/greece-military...
- bobcostas55 11y ago
  Greece got loans at lower interest rates than Germany was paying at the time. That's not what "loan sharking" is.
- derriz 11y ago
  How does this make sense? Greece accounts for less than 1% of German exports. Germany gave Greece 80B to protect 4B worth of exports?
  - Someone 11y ago
    I don't argue it makes sense, but Germany also got a few years of interest on those loans. Could they have gotten the same interest elsewhere for significantly less risk? I doubt it. There also are claims Germany made lots of money on the crisis itself because it made it cheaper for them to borrow money (http://www.keeptalkinggreece.com/2015/08/10/study-germany-made-e100bn-profit-on-greek-crisis/ http://www.keeptalkinggreece.com/2015/08/10/study-germany-ma...)
- forgetsusername 11y ago
  >Greece was loan-sharked by Germany and other "investors" for the explicit purpose of pumping up German exports I hear the same argument with the housing crisis; that people were somehow "suckered" into borrowing money. I don't understand how other people can be blamed for borrowing, spending, then failing to repay.
  - 11y ago
mcv 11y ago
The irony is that Germany also owes Greece $300 billion, but refuses to acknowledge it. The German position towards Greece is extremely hypocritical, selfish, and undermining the stability of the EU. Also, if a company borrowed money and couldn't repay it, they can declare bankruptcy and have their debt restructured. Greece needs to have their debt restructured. Most financial experts say it's irresponsible to expect them to pay it all back, but Germany took those debts from the banks (in order to protect the banks) when it was already clear Greece couldn't pay, and then used their political weight to enforce full repayment. The way Germany treated Greece is disgraceful and foolish on several different levels, and it's extremely damaging to the EU.
- pbhjpbhj 11y ago
  >The irony is that Germany also owes Greece $300 billion // Can you cite a source of this and perhaps go in to it a bit more?
  - mstade 11y ago
    I think they are referring to war reparations which Greece claims Germany still owes them[1]. I don't know anything about this really, but the article suggests Germany's standpoint was something to the effect that Greece should've brought this up earlier (in negotiations before joining the EU, for instance) and failing to do so should mean they aren't entitled to any recompense. An odd argument, if indeed I've understood it correctly, since I guess it would suggest Germany acknowledges there may indeed be debt owed to Greece. Regardless, it makes for more interesting reality tv than catching up with the Khlardäshiäns[2]. [1]: http://www.bbc.com/news/world-europe-31849430 http://www.bbc.com/news/world-europe-31849430 [2]: https://youtu.be/Ol3KuDTiZtY?t=2m20s https://youtu.be/Ol3KuDTiZtY?t=2m20s
    - mcv 11y ago
      Originally, reparations were postponed until there was an official peace treaty. Despite WW2 ending in 1945, there apparently wasn't official peace until the German reunification in 1990. At that time, the major allies decided to forgive Germans war debt. Greece was never a party to those negotiations, and would actually like its part of the war debt to be repaid. So before Greece was too late, they were too early because there wasn't a peace treaty yet. There's no way for them to win. In any case, Germany had massive amounts of debt forgiven, so them tightening the screws when someone else owes them money, is very hypocritical. Add to that that Germany is really rich and could easily handle a $100 bn or $300 bn loss, whereas Greece is in serious trouble, and that's partially because of Germany. The reason Germany is so unforgiving, is that back in 2008, Merkel wanted to rescue the banks from their bad loans, and when the German voters questioned whether that was wise, she promised that the loans would be repaid. Forgiving the loans now would be breaking that promise. Merkel wanting to save the banks from their own foolish risks is part of the problem. Had they not lent money to Greece, Greece would have had to restructure much earlier. Instead, Greece was allowed to live on money they didn't have, and all of Europe knew and was fine with that. Until the crisis hit, and now Greece is the scapegoat for everybody's problems. I'm not saying Greece is innocent here; they obviously aren't. But almost everybody carries some of the blame here, especially Merkel, and now they're sacrificing Greece to absolve themselves of their own mistakes.

by jasode 11y ago

jacobolus 11y ago

If the US were organized like the EU, several of the states would be heavily indebted and bankrupt, with a third world quality of life, and the financial, industrial, and entertainment centers would be even richer. Instead, richer states transfer huge amounts of money to poorer states through various federal programs (infrastructure spending, assistance to the states, federal welfare programs, etc.), going a long way towards putting citizens on an equal footing everywhere in the nation. The banking system is unified and federally insured, disaster relief is centrally supported, people are free to move around entirely freely as citizenship is handled at the national level. Every state has a comparable seat at the political table. The weaker states in Europe should have never agreed to a currency union without any kind of fiscal or political union. It led to a massive bubble of stupidly cheap debt and speculative capital inflow, and then when the economy started looking iffy all the money flowed out again, and poof. Losing control of your monetary policy is straightjacket enough when your economy dips, but under the rules of their debt deals, Greece also lost control over fiscal policy, and was forced to apply pro-cyclical cuts to government spending. They ended up in worse-than-great-depression level economic collapse, with absolutely no tools available to deal with it. For Germany by contrast, the Euro has been great (though fiscal austerity in response to a recession was stupid for them too). Their currency has been artificially weak relative to their neighbors, helping them run huge trade surpluses.

wfn 11y ago
Agree completely. Not having the ability to inflate one's currency in times of economic struggle (so that exports are made to be cheaper, etc.) is not the best thing; while for Germany it helps with their own exports. Moreover, lots of Greek debt (IIRC) was originally to banks which had lent lots of money without oversight; almost knowing that someone (the EU states) would take over the debt if need be... Of course Greece had borrowed recklessly on their end as well. But I think the analogy and contrast to how US states work is really good. Want a single currency across multiple areas with differing economic performance? OK, but then better have mechanisms for supporting equal footing.
- forgetsusername 11y ago
  >banks which had lent lots of money without oversight If you sign a legally binding document that you will repay a loan, plus interest, or your assets are on the line, what "oversight" do you need? Wouldn't the world be a better place if people paid money back as contracted, rather than ripping off (and somehow blaming) the lender? If you don't like the terms, don't accept them. "But we need money!" isn't an excuse.
  - Aeolos 11y ago
    No, it wouldn't. Categorically. If everyone repaid debts, then lending money wouldn't require interest. Interest expresses the danger that money may not be repaid as, for example, during bankruptcy proceedings. Debt forgiveness has existed since the dawn of money. See [1] for more information. [1] http://www.amazon.com/Debt-The-First-000-Years/dp/1612191290 http://www.amazon.com/Debt-The-First-000-Years/dp/1612191290
Shivetya 11y ago
Well quite a few states are heavily indebted. While many if not the majority have balanced budget rules they and the cities circumvented fiscal responsibility by making out too many promises to government and union retirement programs. That is their real time bomb and quite a few states are/will be in the same boat as Greece when time comes to pay up

erebus_rex 11y ago

In 1953 Germany had half its WWI debt erased to rebuild the country and curtail violent attitudes. Also, Greece did not dig themselves in this hole alone. Its a little telling that so many EU members kept lending to them despite ample signs of fiscal irresponsibility. I agree with the general gist of your argument but you can't treat firms and nations and equals in this case. Greece's problem reflects a deeper concern of international debt structures and the concerns of the union against those of member nations.

chii 11y ago
a video i watched (which, i can't for the hell of me, remember the url or name), explained that the difference between the EU and the USA is that of national identity. People in the USA doesn't bat an eye when federal funds are sent to states whose revenue is below the national average. There's no ethos where a 'they' and 'us', unlike in the EU.
- jessaustin 11y ago
  This is mostly correct, but the dynamic in USA is a bit more complicated. When one compares "donor" states to "recipient" states, by and large the donors are states with a political commitment to expanded federal spending while legislators elected by the recipients at least rhetorically favor curtailed federal spending. The transfers thus amount to a sort of "bribe" that allows spending bills to get through Congress. It's not clear to what extent the "spend less" position is actually a calculated pose to procure more transfers...
  - kpil 11y ago
    I think one reason is there are larger cultural differences, which is also reflected in government efficiency, corruption, and work ethics. In particular, the northern 'ex protestant' nations are hesitant to piss away money on their southern friends. For a lot of reasons.
    - Aeolos 11y ago

TheOtherHobbes 11y ago

Greece was loan-sharked by Germany and other "investors" for the explicit purpose of pumping up German exports and making German shareholders happier. This is not quite the same thing as taking a lot of other people's money. A lot of the money never reached the ground, so most of the Greek people got very little benefit from it. Rather a lot of it went on defence boondoggles. See e.g. http://www.theguardian.com/world/2012/apr/19/greece-military-spending-debt-crisis http://www.theguardian.com/world/2012/apr/19/greece-military...

bobcostas55 11y ago
Greece got loans at lower interest rates than Germany was paying at the time. That's not what "loan sharking" is.
derriz 11y ago
How does this make sense? Greece accounts for less than 1% of German exports. Germany gave Greece 80B to protect 4B worth of exports?
- Someone 11y ago
  I don't argue it makes sense, but Germany also got a few years of interest on those loans. Could they have gotten the same interest elsewhere for significantly less risk? I doubt it. There also are claims Germany made lots of money on the crisis itself because it made it cheaper for them to borrow money (http://www.keeptalkinggreece.com/2015/08/10/study-germany-made-e100bn-profit-on-greek-crisis/ http://www.keeptalkinggreece.com/2015/08/10/study-germany-ma...)
forgetsusername 11y ago
>Greece was loan-sharked by Germany and other "investors" for the explicit purpose of pumping up German exports I hear the same argument with the housing crisis; that people were somehow "suckered" into borrowing money. I don't understand how other people can be blamed for borrowing, spending, then failing to repay.
- 11y ago

mcv 11y ago

The irony is that Germany also owes Greece $300 billion, but refuses to acknowledge it. The German position towards Greece is extremely hypocritical, selfish, and undermining the stability of the EU. Also, if a company borrowed money and couldn't repay it, they can declare bankruptcy and have their debt restructured. Greece needs to have their debt restructured. Most financial experts say it's irresponsible to expect them to pay it all back, but Germany took those debts from the banks (in order to protect the banks) when it was already clear Greece couldn't pay, and then used their political weight to enforce full repayment. The way Germany treated Greece is disgraceful and foolish on several different levels, and it's extremely damaging to the EU.

pbhjpbhj 11y ago
>The irony is that Germany also owes Greece $300 billion // Can you cite a source of this and perhaps go in to it a bit more?
- mstade 11y ago
  I think they are referring to war reparations which Greece claims Germany still owes them[1]. I don't know anything about this really, but the article suggests Germany's standpoint was something to the effect that Greece should've brought this up earlier (in negotiations before joining the EU, for instance) and failing to do so should mean they aren't entitled to any recompense. An odd argument, if indeed I've understood it correctly, since I guess it would suggest Germany acknowledges there may indeed be debt owed to Greece. Regardless, it makes for more interesting reality tv than catching up with the Khlardäshiäns[2]. [1]: http://www.bbc.com/news/world-europe-31849430 http://www.bbc.com/news/world-europe-31849430 [2]: https://youtu.be/Ol3KuDTiZtY?t=2m20s https://youtu.be/Ol3KuDTiZtY?t=2m20s
  - mcv 11y ago
    Originally, reparations were postponed until there was an official peace treaty. Despite WW2 ending in 1945, there apparently wasn't official peace until the German reunification in 1990. At that time, the major allies decided to forgive Germans war debt. Greece was never a party to those negotiations, and would actually like its part of the war debt to be repaid. So before Greece was too late, they were too early because there wasn't a peace treaty yet. There's no way for them to win. In any case, Germany had massive amounts of debt forgiven, so them tightening the screws when someone else owes them money, is very hypocritical. Add to that that Germany is really rich and could easily handle a $100 bn or $300 bn loss, whereas Greece is in serious trouble, and that's partially because of Germany. The reason Germany is so unforgiving, is that back in 2008, Merkel wanted to rescue the banks from their bad loans, and when the German voters questioned whether that was wise, she promised that the loans would be repaid. Forgiving the loans now would be breaking that promise. Merkel wanting to save the banks from their own foolish risks is part of the problem. Had they not lent money to Greece, Greece would have had to restructure much earlier. Instead, Greece was allowed to live on money they didn't have, and all of Europe knew and was fine with that. Until the crisis hit, and now Greece is the scapegoat for everybody's problems. I'm not saying Greece is innocent here; they obviously aren't. But almost everybody carries some of the blame here, especially Merkel, and now they're sacrificing Greece to absolve themselves of their own mistakes.