3 ms·

And that would, as in the case of the banks, create all kinds of moral hazard issues. Being a Greek, I could potentially feel relieved by an outcome such as the

by cgio 11y ago

And that would, as in the case of the banks, create all kinds of moral hazard issues. Being a Greek, I could potentially feel relieved by an outcome such as the one you describe. Nevertheless, any such solution would be just a painkiller that fails to address the source of the pain. The Eurozone is fundamentally broken so, even if it is painful, I think exiting the Eurozone is the most appropriate action at this stage. How we can work together in Europe to make sure this does not mean we default to our obligations towards other European people is the question. And of course this should be based on an assessment of the debts we took to support indigenous corruption and consumption (which we should be paying) versus the debt of the last five years which has accumulated just to support imported incompetence (as proven by the outcomes) and mostly served as a concealed European banks bail out.

Balgair 11y ago
It seems most likely that Greece will exit. It makes the most sense. Your moral hazard argument is correct, if Greece is forgiven, then other politicians in Italy and other weaker countries will sense an opportunity; one that cannot be allowed financially. It allows Greece to survive and the euro to continue. The issue still remains with the euro, that there is a common currency and no common planning. That the euro has survived so long is a testament to the integrated economies of Europe and that their planning is typically similar as a consequence. However, only a unified planning commission can let it survive much longer.
ubernostrum 11y ago
The moral hazard argument feels a bit flat considering that A) Imposing harsh sanctions on Germany to "repay its debts" after WWI was a major factor leading to WWII, and B) The modern industrialized economies of northern and western Europe owe their start to the Marshall Plan. The loan portions of the plan were eventually repaid, but represented less than 10% of the over $12 billion in aid given. In historical terms, working with Greece to restructure and actually fix the economic problems would be a financial drop in the bucket compared to the money lavished on rebuilding other European economies within living memory.
- tormeh 11y ago
  War reparations aren't debt - they are the plunder of the winning party in a war.
  - gonvaled 11y ago
    You could argue that Greece found itself in war against the financial markets. They share some of the blame (like everybody does in any war), but the markets won, so they could provide reparations for the defeated Greece. As in the Marshall Plan example, it is in the interest of (some) financial market players to ensure that Greece can come back to the table, and specially to ensure that the Euro-area has a long-term prospect. The analogy may seem stupid, but I say it describes pretty well the world we are leaving in.
cwyers 11y ago
The moral hazards for the banks were already created as soon as Greek's loans from the banks were replaced by their current loans from the ECB and other sovereign institutions. That ship has sailed. The original lenders already have their money back, no matter what Greece does now.

by cgio 11y ago

Balgair 11y ago

It seems most likely that Greece will exit. It makes the most sense. Your moral hazard argument is correct, if Greece is forgiven, then other politicians in Italy and other weaker countries will sense an opportunity; one that cannot be allowed financially. It allows Greece to survive and the euro to continue. The issue still remains with the euro, that there is a common currency and no common planning. That the euro has survived so long is a testament to the integrated economies of Europe and that their planning is typically similar as a consequence. However, only a unified planning commission can let it survive much longer.

ubernostrum 11y ago

The moral hazard argument feels a bit flat considering that A) Imposing harsh sanctions on Germany to "repay its debts" after WWI was a major factor leading to WWII, and B) The modern industrialized economies of northern and western Europe owe their start to the Marshall Plan. The loan portions of the plan were eventually repaid, but represented less than 10% of the over $12 billion in aid given. In historical terms, working with Greece to restructure and actually fix the economic problems would be a financial drop in the bucket compared to the money lavished on rebuilding other European economies within living memory.

tormeh 11y ago
War reparations aren't debt - they are the plunder of the winning party in a war.
- gonvaled 11y ago
  You could argue that Greece found itself in war against the financial markets. They share some of the blame (like everybody does in any war), but the markets won, so they could provide reparations for the defeated Greece. As in the Marshall Plan example, it is in the interest of (some) financial market players to ensure that Greece can come back to the table, and specially to ensure that the Euro-area has a long-term prospect. The analogy may seem stupid, but I say it describes pretty well the world we are leaving in.

cwyers 11y ago

The moral hazards for the banks were already created as soon as Greek's loans from the banks were replaced by their current loans from the ECB and other sovereign institutions. That ship has sailed. The original lenders already have their money back, no matter what Greece does now.