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Heh it cracked me up too. "Well BBC ran a show last night" therefore it must be true and I can now give you all my expert opinion in the matter. Private debt

by muyuu 14y ago

Heh it cracked me up too. "Well BBC ran a show last night" therefore it must be true and I can now give you all my expert opinion in the matter. Private debt is much higher in the UK than in Greece, both in relative and in absolute terms. Public debt is probably second in line to Greece, it's a close race with Italy and maybe some smaller Eastern countries. I wonder if the BBC covered that last night.

kamaal 14y ago
Fine, I never said borrowing was wrong. I said borrowing without having means to pay back is wrong. You almost make it look as though Greece did nothing wrong in borrowing, but now Germany and alike are committing a huge sin in not bailing them out. UK, Italy and all those countries you mentioned might definitely have the same debt. But the situation there is different because those people have a way of paying their loans back. I am not expert in economics but I know, spending more than earning(Or what you can earn) is not healthy for any economy.
- muyuu 14y ago
  Germany has massive part on it by enforcing such shockingly low borrowing rates across the Eurozone. It completely destroyed countries with immature Real Estate landscapes, countries used to high inflation rates that collectively shot themselves in the foot. Germany and France took no hostages when they were stagnating and failed to meet EU requirements. They gave absolutely no regard to these countries and now they are paying for it. They will either way, because that's their main market, Europe. Because it's not just Greece that's over-borrowed, it's most of the eurozone including Italy, France, Spain, Belgium, Netherlands, ... basically most of the Eurozone by GDP.
  - lispm 14y ago
    Germany 'enforced' the borowing rates? Let's look a few years back. The rating agencies rated all kinds of junk very high. The banks all over the place where very creative with products hiding the risks. When Germany was asking for tighter regulations we were ignored or laughed at. Now the Germans simply demand that the lessons are learned and we see structural reforms - reforms which can not be done by just throwing more money at countries high in debt.
    - muyuu 14y ago
      Yep, they pretty much control the rates. This is not "a few years back" - this clusterfuck has been brewing since year 2000 with the euribor. At that point several countries needed high rates to stop their overheating borrowing and they were given a shower of petrol to stop their fires.
  - Uchikoma 14y ago
    As this pops up everywhere, could you please cite a source from e.g. a ECB protocol or otherwise how Germany "controls the rates" or "enforces shockingly low borrowing rates" in violation of the ECB charta? The ECB back then set rates in accordance with inflation, e.g. to keep it low. That's the charta of the ECB. When a high inflation country joins a construct that has a goal of keeping inflation low, then yes you have a problem if you do not change. But I'm not sure Greece e.g. was forced to join a low inflation construct. From the ECB homepage: "The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area." (Beside the obvious fact that "shockingly low borrowing rates" would lead to high inflation, which could then not lead to "countries used to high inflation rates that collectively shot themselves in the foot.") (PS: I'm biased as I'm German)
    - muyuu 14y ago
      The rates always follow the needs of Germany and sometimes France. The rates are discretionary and set by the president of the ECB. Borrowing in most countries with a "hot" Real Estate market was unstoppable. Only higher rates like they historically had could have controlled it. The dimension of the damage done by this policy is incalculable. There was no compromise. If a middle-ground, 5-6% rate had been set, the cost would have been shared. Now we're like Japan, the UK and to some extent the US: way over-leveraged, and the problem is our asymmetry and the fact that we really don't believe in the Union. When push comes to shove we shift blame. In the US nobody talked about expelling California from the Union when it went kaput and their hole is of a much bigger dimension than that of Greece. Germans will never consider Greeks as equals, it's a fact, so we either enforce it or call it quits.
      - lispm 14y ago
        The EU consists of independent countries which have their own governments, their own economic policies, their own banks, ... a real-estate bubble in Greece is fully the responsibility of Greece. A hot 'real-estate' market not stoppable? Where was it tried? How about Mexico? Would the US pay for Mexico to prevent a bancruptcy there?
- stevoski 14y ago
  Spending more than you earn can sometimes be quite healthy, for an individual, for a company, and for an economy. It's called investment. An example: when you buy take a mortgage to buy a house several times your annual income, you've spent more than you earned. Typically you need two or three decades to pay off the extra money you spent.
  - deleted 14y ago
    [deleted]
  - josh33 14y ago
    That is called debt.
- batista 14y ago
  >I never said borrowing was wrong. I said borrowing without having means to pay back is wrong. You almost make it look as though Greece did nothing wrong in borrowing, but now Germany and alike are committing a huge sin in not bailing them out. Actually it's a long and convoluted history. Do you know for example that when the newly independent state of Greece was established (after fighting for liberation from the Ottoman empire), Germany (the Bavarian state) appointed a king and cabinet of it's own there? The new state, being very poor and having an immediate need for money to bootstrap itself (for the army, to build infrastructure, etc), got a series of loans from abroad with very ominous terms, worse than usury that they had to accept, because there where no other sources of income at that early state. The terms were like you get only 60% of the actual loan value and leave the rest 40% as insurance against not paying --but you have to repay everything plus interest. Even those loans were embezzled in large part by the bavarian cabinet (and Greeks connected to it), leaving like 10-20% of the actual loan to the state. So, those were some of the starting steps of the new Greek state, 180 years before. Now, in the WWII, Germany not only invaded Greece and destroyed it's infrastructure, but also took a loan (Germany FROM Greece), amounting to something like 1/5 of the current debt in today's money. When I say "took a loan", actually the appointed government of the occupying German forces gave them one, it's not like the Greek people approved it. Then, after the war, they refused to pay the recuperations...

by muyuu 14y ago

kamaal 14y ago

Fine, I never said borrowing was wrong. I said borrowing without having means to pay back is wrong. You almost make it look as though Greece did nothing wrong in borrowing, but now Germany and alike are committing a huge sin in not bailing them out. UK, Italy and all those countries you mentioned might definitely have the same debt. But the situation there is different because those people have a way of paying their loans back. I am not expert in economics but I know, spending more than earning(Or what you can earn) is not healthy for any economy.

muyuu 14y ago
Germany has massive part on it by enforcing such shockingly low borrowing rates across the Eurozone. It completely destroyed countries with immature Real Estate landscapes, countries used to high inflation rates that collectively shot themselves in the foot. Germany and France took no hostages when they were stagnating and failed to meet EU requirements. They gave absolutely no regard to these countries and now they are paying for it. They will either way, because that's their main market, Europe. Because it's not just Greece that's over-borrowed, it's most of the eurozone including Italy, France, Spain, Belgium, Netherlands, ... basically most of the Eurozone by GDP.
- lispm 14y ago
  Germany 'enforced' the borowing rates? Let's look a few years back. The rating agencies rated all kinds of junk very high. The banks all over the place where very creative with products hiding the risks. When Germany was asking for tighter regulations we were ignored or laughed at. Now the Germans simply demand that the lessons are learned and we see structural reforms - reforms which can not be done by just throwing more money at countries high in debt.
  - muyuu 14y ago
    Yep, they pretty much control the rates. This is not "a few years back" - this clusterfuck has been brewing since year 2000 with the euribor. At that point several countries needed high rates to stop their overheating borrowing and they were given a shower of petrol to stop their fires.
- Uchikoma 14y ago
  As this pops up everywhere, could you please cite a source from e.g. a ECB protocol or otherwise how Germany "controls the rates" or "enforces shockingly low borrowing rates" in violation of the ECB charta? The ECB back then set rates in accordance with inflation, e.g. to keep it low. That's the charta of the ECB. When a high inflation country joins a construct that has a goal of keeping inflation low, then yes you have a problem if you do not change. But I'm not sure Greece e.g. was forced to join a low inflation construct. From the ECB homepage: "The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area." (Beside the obvious fact that "shockingly low borrowing rates" would lead to high inflation, which could then not lead to "countries used to high inflation rates that collectively shot themselves in the foot.") (PS: I'm biased as I'm German)
  - muyuu 14y ago
    The rates always follow the needs of Germany and sometimes France. The rates are discretionary and set by the president of the ECB. Borrowing in most countries with a "hot" Real Estate market was unstoppable. Only higher rates like they historically had could have controlled it. The dimension of the damage done by this policy is incalculable. There was no compromise. If a middle-ground, 5-6% rate had been set, the cost would have been shared. Now we're like Japan, the UK and to some extent the US: way over-leveraged, and the problem is our asymmetry and the fact that we really don't believe in the Union. When push comes to shove we shift blame. In the US nobody talked about expelling California from the Union when it went kaput and their hole is of a much bigger dimension than that of Greece. Germans will never consider Greeks as equals, it's a fact, so we either enforce it or call it quits.
    - lispm 14y ago
      The EU consists of independent countries which have their own governments, their own economic policies, their own banks, ... a real-estate bubble in Greece is fully the responsibility of Greece. A hot 'real-estate' market not stoppable? Where was it tried? How about Mexico? Would the US pay for Mexico to prevent a bancruptcy there?
stevoski 14y ago
Spending more than you earn can sometimes be quite healthy, for an individual, for a company, and for an economy. It's called investment. An example: when you buy take a mortgage to buy a house several times your annual income, you've spent more than you earned. Typically you need two or three decades to pay off the extra money you spent.
- deleted 14y ago
  [deleted]
- josh33 14y ago
  That is called debt.
batista 14y ago
>I never said borrowing was wrong. I said borrowing without having means to pay back is wrong. You almost make it look as though Greece did nothing wrong in borrowing, but now Germany and alike are committing a huge sin in not bailing them out. Actually it's a long and convoluted history. Do you know for example that when the newly independent state of Greece was established (after fighting for liberation from the Ottoman empire), Germany (the Bavarian state) appointed a king and cabinet of it's own there? The new state, being very poor and having an immediate need for money to bootstrap itself (for the army, to build infrastructure, etc), got a series of loans from abroad with very ominous terms, worse than usury that they had to accept, because there where no other sources of income at that early state. The terms were like you get only 60% of the actual loan value and leave the rest 40% as insurance against not paying --but you have to repay everything plus interest. Even those loans were embezzled in large part by the bavarian cabinet (and Greeks connected to it), leaving like 10-20% of the actual loan to the state. So, those were some of the starting steps of the new Greek state, 180 years before. Now, in the WWII, Germany not only invaded Greece and destroyed it's infrastructure, but also took a loan (Germany FROM Greece), amounting to something like 1/5 of the current debt in today's money. When I say "took a loan", actually the appointed government of the occupying German forces gave them one, it's not like the Greek people approved it. Then, after the war, they refused to pay the recuperations...