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Because, in history, other countries were forgiven their debts, as well, especially so Germany. If Germany gets their debts forgiven after waging war over Europ

by _ak 11y ago

Because, in history, other countries were forgiven their debts, as well, especially so Germany. If Germany gets their debts forgiven after waging war over Europe, then why not Greece after living beyond their means? That would be consistent, as well. And helpful if it means it keeps the Euro zone together and relatively stable. And let's not forget how much of the help for Greece wasn't actual help, it was a bailout by proxy for German and French banks. How would the political climate in Europe be if these banks had needed an explicit bailout?

jevgeni 11y ago
You are talking about historical consistency. What the European establishment needs is political consistency. The Baltic states, as well as Spain, Portugal, and Ireland did go through varying degrees of austerity. If you start treating one member differently, right after other members went through difficult reforms, why should other members then play ball? And that is false reasoning: does this mean that any country can wage war and racial extermination and then be forgiven, because Germany already was? Regarding the bailout thing. A bailout is, per definition, paying off the creditors (banks in this case). The reason people do it at all is to keep the confidence of the money market. Greece wouldn't need a bailout if they were planning to stop taking on any debt at all. But they aren't. To answer your question, if the banks would take the hit, then it would hurt private households. People think of banks as some super dodgy prop hedge funds, that use their own money to reap super profits. They don't. Banks invest the money of their clients and bag any difference between the interest rate they've offered and the interest rate they've earned. So again, the hit would go to pension funds and possibly depositors. Now, what kind of political climate would be in Europe, if say a German pensioner suddenly got less, because the Greeks couldn't pay back?
- peterfirefly 11y ago
  > If you start treating one member differently, right after other members went through difficult reforms, why should other members then play ball? Yep. We are talking iterated games and rational expectations here. Something you'd expect an expert in game theory to understand -- which he of course does, leading to the conclusion that he has been very dishonest the whole way through. (I agree with the rest as well.)

by _ak 11y ago

jevgeni 11y ago

You are talking about historical consistency. What the European establishment needs is political consistency. The Baltic states, as well as Spain, Portugal, and Ireland did go through varying degrees of austerity. If you start treating one member differently, right after other members went through difficult reforms, why should other members then play ball? And that is false reasoning: does this mean that any country can wage war and racial extermination and then be forgiven, because Germany already was? Regarding the bailout thing. A bailout is, per definition, paying off the creditors (banks in this case). The reason people do it at all is to keep the confidence of the money market. Greece wouldn't need a bailout if they were planning to stop taking on any debt at all. But they aren't. To answer your question, if the banks would take the hit, then it would hurt private households. People think of banks as some super dodgy prop hedge funds, that use their own money to reap super profits. They don't. Banks invest the money of their clients and bag any difference between the interest rate they've offered and the interest rate they've earned. So again, the hit would go to pension funds and possibly depositors. Now, what kind of political climate would be in Europe, if say a German pensioner suddenly got less, because the Greeks couldn't pay back?

peterfirefly 11y ago
> If you start treating one member differently, right after other members went through difficult reforms, why should other members then play ball? Yep. We are talking iterated games and rational expectations here. Something you'd expect an expert in game theory to understand -- which he of course does, leading to the conclusion that he has been very dishonest the whole way through. (I agree with the rest as well.)