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The thing is, as long as you never intend to redeem your financial assets for real goods, it really doesn't matter. Let's say Germany as a nation holds financia

The thing is, as long as you never intend to redeem your financial assets for real goods, it really doesn't matter. Let's say Germany as a nation holds financial claims on Greece denominated as X€. If, as a nation, they intend to continue running net exports, this means that those financial claims never need to be redeemed. If the assets are in the form of e.g. 10 year bonds, then Germany could just exchange them for new 10 year Greek bonds at maturity. So long as Germany and Greece both accept the game, their will never be any problem of insolvency. This rollover game could continue indefinitely. That's my whole point. It would only have to stop if, at some point, Germany decides that it wants to become a net importer, which is equivalent to running down net financial claims against other countries. Then at some point they would want to reduce the amount of financial claims against Greece, and Greece would have to cancel their liabilities, ostensibly by sending real goods to Germany. The point is, however, that the German elite is totally hell-bent on staying a net exporting country forever. Of course, this is not what happens, because micro economics is different from macro economics. The micro actors behave like you explain, and their behavior is perfectly reasonable from their individual point of view (well, except that it is totally unreasonable for non-capitalist Germans to be in favor of net exports, but they have no say in the matter at the moment). However, on the macro level, this creates behavior that is quite literally schizophrenic.

anamax 15y ago
> The point is, however, that the German elite is totally hell-bent on staying a net exporting country forever. That goal doesn't imply that it's reasonable for them to simply "give away" the value of that surplus, let alone for them to give away in excess of that surplus for any period of time. The latter is important because some of the bailout proposals have germany giving up multiple years of export surplus. In addition, some of the proposals seem to be both giving up on Greek debts owed to Germany (and/or German banks) and taking on debts owed to others. Note that the surplus does give Germany some power, so it isn't just bits on a disk. > So long as Germany and Greece both accept the game, their will never be any problem of insolvency. Another problem is that admiting to that game is (for Germany) admitting to being a sucker. While Germany may, in fact, be a sucker, admitting it is a very different thing.

anamax 15y ago

> The point is, however, that the German elite is totally hell-bent on staying a net exporting country forever. That goal doesn't imply that it's reasonable for them to simply "give away" the value of that surplus, let alone for them to give away in excess of that surplus for any period of time. The latter is important because some of the bailout proposals have germany giving up multiple years of export surplus. In addition, some of the proposals seem to be both giving up on Greek debts owed to Germany (and/or German banks) and taking on debts owed to others. Note that the surplus does give Germany some power, so it isn't just bits on a disk. > So long as Germany and Greece both accept the game, their will never be any problem of insolvency. Another problem is that admiting to that game is (for Germany) admitting to being a sucker. While Germany may, in fact, be a sucker, admitting it is a very different thing.