3 ms·
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
by 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 agoWar reparations aren't debt - they are the plunder of the winning party in a war.
- gonvaled 11y agoYou 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.