6 ms·

Germans Forget Postwar History Lesson on Debt Relief in Greece Crisis

36 points by MrBuddyCasino 11y ago

Gossilla 11y ago
There have been several haircuts to the Greek debt, including stretching of payment goals.
- halfdan 11y ago
  That, and the NYTimes is ignoring it's own journalism: http://www.nytimes.com/2012/11/28/world/europe/in-germany-weighing-debt-relief-against-debt-reduction.html http://www.nytimes.com/2012/11/28/world/europe/in-germany-we...
- vidarh 11y ago
  Yet it's still nowhere near sustainable levels.
- de_Selby 11y ago
  And no matter how many lazy op-eds are written saying it, this isn't simply a matter of Greece and Germany. A dept write-off would have huge knock-on effects in the rest of Europe, with Ireland, Portugal, Spain also then looking for similar write-offs. Not to mention the crippling Italy, France and Germany's banks. The money has to come from somewhere.
  - digitalengineer 11y ago
    Everybody own everybody money lots of money. How about swapping all this debt and writing it off? See this 3 min. video by two English comedians: https://www.youtube.com/watch?v=YNA2VG_piUo https://www.youtube.com/watch?v=YNA2VG_piUo
  - fineman 11y ago
    No chance it could come from the banks that made the bad loans? You know, make the criminals pay. I imagine that would have more impact than making the victims pay.
    - malka 11y ago
      That would go against the very purpose of a bank : privatize what you earn, share your losses.
- rtpg 11y ago
  I thought there was only one debt devaluation (50-odd percent in 2010), but it was combined with austerity measures that destroyed any potential of growth.
  - verinus 11y ago
    i thought that prior to syriza election there was a positive development in the greek economy?
dmichulke 11y ago
Germans Forget Postwar ... Most people these days are unable to distinguish between people and their government. They assume that governments act on behalf of the people, yet, somehow they always claim they don't feel represented by their government. A sad world. EDIT: "changed government and its people" to "people and their government", added title
- Hermel 11y ago
  In that case, we should discuss helping the people, and not discuss helping the Greek government. In fact, Europe is already helping hundreds of thousands of Greeks by offering them good jobs in other countries.
  - melling 11y ago
    6 in 10 Greeks don't pay taxes. Tax evasion is common. http://www.cnn.com/2010/WORLD/europe/12/31/greece.taxes/ http://www.cnn.com/2010/WORLD/europe/12/31/greece.taxes/ http://boingboing.net/2010/05/04/satellite-photos-cat.html http://boingboing.net/2010/05/04/satellite-photos-cat.html Have they fixed the early retirement issue? http://www.businessinsider.com/greece-germany-pensions-2010-4?op=1 http://www.businessinsider.com/greece-germany-pensions-2010-... http://greece.greekreporter.com/2014/12/04/75-of-greek-pensioners-enjoy-early-retirement http://greece.greekreporter.com/2014/12/04/75-of-greek-pensi...
    - BBlarat 11y ago
      yes, the average greek retires at 62 and the average european retires at 60. http://www.oecd.org/els/emp/ageingandemploymentpolicies-statisticsonaverageeffectiveageofretirement.htm http://www.oecd.org/els/emp/ageingandemploymentpolicies-stat...
      - creshal 11y ago
        What lazy bast… Ach, scheiße.
      - melling 11y ago
ben_bai 11y ago
There is a slight difference between a country defeated twice with millions dead an bomb to ashes and a country in debt because of "cheap" loans. thats the tl;dr explaination.
- rtpg 11y ago
  if you read the article, you'd see that it's not just postwar Germany, but many other countries who only recover after a massive devaluation of their debt. Besides, austerity has proven countless times not to work, so why would Germany keep on insisting on it?
  - digitalengineer 11y ago
    It's part of their (and our Dutch) culture. Protestant / Calvinist. 'We were born in to sin and must work hard to reach paradise'. This is why the Greek bashing in the papers has been so effective. They were 'lazy, bureaucrats, and what not. (Southern country's are more laid back. Catholic faith has forgiveness and starting over as main themes.
    - mafribe 11y ago
      Greek bashing? The Greek airforce has [1] 156 F-16s, an airplane that's $165 million a piece new. Why on earth does Greece, a NATO country need 156 F-16s? Could they easily be sold for a couple of billions on the second hard market? Nah perish the tought! Greece needs to be the largest importer of conventional weapons in Europe and its military spending must be the highest in the European Union (relative to G.D.P) [2]. Greece must be “by far” the country with the largest share of military personnel to population in the EU. [1] https://en.wikipedia.org/wiki/List_of_aircraft_of_the_Hellenic_Air_Force https://en.wikipedia.org/wiki/List_of_aircraft_of_the_Hellen... [2] https://en.wikipedia.org/wiki/Military_of_Greece#Conscription.2C_budget.2C_international_operations https://en.wikipedia.org/wiki/Military_of_Greece#Conscriptio...
      - digitalengineer 11y ago
ghshephard 11y ago
As a Canadian living in Singapore I have no skin in this game, but here's a counterpoint: http://www.bloombergview.com/articles/2015-01-27/germany-deserved-debt-relief-greece-doesn-t-i5fdca2y http://www.bloombergview.com/articles/2015-01-27/germany-des... The kind of summary (though the article is short and worth reading, if only to get some balance): There is a not-so-subtle difference between voluntarily taking on debts made by previous, rogue governments at a currency rate favorable to the creditors -- and heedlessly accumulating debts of one's own while concealing the true size of budget deficits. In the first case, the implication is harsh self-imposed discipline and penitence. In the second case, profligacy. For those inclined to dig in and do deeper research, http://library.fes.de/pdf-files/iez/10137.pdf http://library.fes.de/pdf-files/iez/10137.pdf and in particular http://papers.ssrn.com/sol3/papers.cfm?abstract_id=493802 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=493802 give lots of great details on what happened back in 1953 with Germany.
- elorant 11y ago
  From the article: "There are ruins at the center of Athens, too, but they are rather more ancient." This insults us. Germans left Greece literally in ruins. The author of the article obviously don't know shit about history. I'm not surprised, even Germans chose to neglect their atrocities. Please people, become a little more informed about what Germany did to my country during the war. It might be irrelevant to the current situation but for us Greeks it is all about justice. In our five thousands years of history no other invading nation inflicted as much damage as Germany. Germans are the most ungrateful fuckers there are.
  - saryant 11y ago
    I think that's an unfair characterization. We're talking about a country that requires its schoolchildren to tour the remnants of a genocide committed only 70 years ago. To say that Germany "neglects their atrocities" is, IMO, out of line. http://www.quora.com/What-is-it-like-for-people-growing-up-in-Germany-to-learn-about-the-Holocaust-in-school http://www.quora.com/What-is-it-like-for-people-growing-up-i...
arkj 11y ago
I don't think you can compare the post war scene with today's Greece. At least the author doesn't provide any data to justify why the debt should be written of except that people are unemployed and pensioners are suffering. Now that is not to say that let people suffer. But i think the broader issue is Tsipras has no plan. They just want the debt to be written off and expect that the economy will recover through some magic. Thomas Piketty is arguing along the similar lines but it think from the perspective that the creditors austerity policy has failed. http://www.thenation.com/article/austerity-has-failed-an-open-letter-from-thomas-piketty-to-angela-merkel/ http://www.thenation.com/article/austerity-has-failed-an-ope... The creditors are saying keep taking a haircut till you recover, and the debtor is saying, Sir that what we've been doing and we are getting into deeper trouble. Are we running out of economic imaginations? Maybe we need more of startup thinking in the space of economy.
- gonvaled 11y ago
  Writing off the debt is the magic when the debt is as huge as it is for Greece. Extending maturity and / or reducing interest rates do not help much if you know that whatever improvements you make to your economy will be swallowed by the financial markets in the future (since the debt still exists). You are a slave country (all countries are dependent on the financial markets in more or less measure, but Greece has completely lost its freedom) Would you work to pay for your student loans if you realized that you will never be able to pay it back, in your whole work life, and that you will be subject to the dictate of your creditors forever? If default was not an option (you can not default on student debt in the US?), I would just leave the country.
mhd 11y ago
"Greece has done little to address its endemic economic mismanagement. But it has few incentives to do so if the fruits of economic improvements will flow to its creditors." Ah, the good ol' Nirvana fallacy.
Tomte 11y ago
"Germany vs. Greece" is a compelling and intriguing narrative, but there 17 more Eurozone members. And some of them take a much tougher stand towards Greece than Germany does. Ask Lithuania how happy they are to pump money towards a country that is richer than they are themselves. Of course, Germany has a lot of influence. But everytime I see articles riffing off this Germany vs. Greece theme, I tend to discount them as shallow.
- luso_brazilian 11y ago
  As this is basically a repeat of the Picketty article recently posted here I'll repost my comment from there to help in the understanding that it is not only Germany that have contributed into the Greek bailout fund. 1. Meet Portugal (my country). Some may know us derisively as the P in PIGS because of our financial problems (much similar to the Greek one in nature and extent). In 2010 and 2011 as one of the 14 member states of the EU that were part of the Greek loan facility Portugal contributed with 1102 million euros into the 52.9 billion loan that greece received [1]. Yes, that's correct, not all of the debt that people are so eager to expect that German forgives is from their coffers, it was actually pooled from the following countries: Belgium, Cyprus, Germany, Estonia, Finland, France, Ireland, Italy, Luxembourg, Malta, Netherlands, Austria, Portugal, Slovenia, Slovakia and Spain. 2. As you may know, about the same time we had our own problems and also had to be bailed out. As part of the measures put in place to reduce our deficit a massive tax hike was implemented in the end of 2012 [2] I'll draw attention to single one of those measures: the 3.5% extraordinary tax on the income paid by every single person with income above minimum wage (485€/month) including pensioners. Now, for the money quote [3]: "Minister of Finance Vitor Gaspar said the tax would bring in 1025 million euros". Less than what Portugal contributed to the Greek bailout fund. 3.5% of the income of every citizen in this country. In conclusion, that's one of the reasons for the nationalistic outrage against Greece defaulting the loan. It is not only the money of the richest bankers of Europe that won't be repaid, it is the taxpayer money of each of those countries that contributed to their rescue. To put in perspective, 1102 million euros means that default would cost every inhabitant in this country 110 euros (about 330€ per household) and not only hypothetically but in practice too as demonstrated above. [1] http://www.rekenkamer.nl/english/Publications/Topics/EU_governance_to_combat_the_economic_and_financial_crisis/Financial_stability_instruments/Financial_instruments/Greek_loan_facility http://www.rekenkamer.nl/english/Publications/Topics/EU_gove... [2] http://edition.cnn.com/2012/12/31/business/portugal-fiscal-tax-increase/ http://edition.cnn.com/2012/12/31/business/portugal-fiscal-t... [3] http://www.eurofound.europa.eu/observatories/eurwork/articles/other/governments-first-bill-taxes-christmas-allowance http://www.eurofound.europa.eu/observatories/eurwork/article... P.S. As one of the most common responses to was that the money didn't went to Greece but to its creditors (without improving the Greek situation) I must add that I agree it is a valid point. But is not related to the fact that the European fund raised to Greece was not money coming from an abstract concept of Europe or from the coffers of the Germans alone but directly from the taxpayers of each of the countries mentioned above. That is the point being made, not that the bailout shouldn't have happened but that it happened and an eventual default won't be on Germany alone.
lyschoening 11y ago
I don't think there is any German who hasn't heard about the debts of WWI, and the debt relief that came after WWII. The reason Germans are opposed to debt relief for Greece is that they have read about Greek nepotism in the public sector, tax avoidance, and other corruption while Greek reforms have not been forthcoming. To the average German voter money for Greece without reforms is pouring water into a broken bucket.
- verinus 11y ago
  i always ask: why should european tax payers pay for a greek state when the greeks themselves dont pay their taxes?
jkot 11y ago
There is lot of stuff like 'Merkel with mustache' in Greece, it is bit tiring. I would not expect it to reach HN front page. Anyway if debt relieve, why Greece? It is well developed country with good infrastructure. Lets send those money to countries which need it more.
empressplay 11y ago
Children suffer when their parents are forced to pay their debts or go into bankruptcy, and certainly nobody lends these families any more money with which to continue their lifestyle. How is a Greek citizen any different than a child with financially-stressed parents? Why can't we write off their debts? Seems unfair to me.
- gonvaled 11y ago
  People can declare bankruptcy (in lots of countries), and children do no need to inherit debts (they will not inherit assets either, of course)
piokoch 11y ago
Greek crisis has two faces. It is true that Greeks introduced crazy socialistic ideas like having written down in the constitution the law that civil servant cannot be made redundant. It ended up with huge number of employed officials doing nothing. It is also true that Greeks made cheating on taxes a pure art (and I am speaking this as a Polish, and people in Poland are not exactly rushing to pay taxes). Covering pools with a military masking net to avoid tax or things like hiding relatives death for many years to get their pension are kind of unusual practices. This pathologies are partly caused by absurd tax regulations, though, so I wouldn't attribute it to "Greek nature", as some people do. But it is also true that Greeks were tricked into joining Eurozone. They had rather weak economy without well developed modern industry. As long as they had drahma, Greek products were cheap, Greece was also cheap as a touristic destination. It has all changed, when they joined Eurozone, this hasn't improved their economy, but made their often low quality products expensive. Who was main beneficiary of this? Obviously Germany, before Euro Deutsch Mark was becoming a very strong currency, so German products were expensive (similarly to Swiss Franc). Introducing Euro changed that. Right now German economy is blooming, they are about to have zero debt budget next year and the rest of Eurozone is kind of in trouble. The other thing, Greeks were actively encouraged to take credits (I can't believe that banks and governments were so stupid that they couldn't analyze situation). Greeks spent those money on products bought abroad (with Germany as a big seller). Greeks bought a lot of military equipment in Germany, for instance. So, Greeks made others rich in that way. Now they are left with top quality war ships, but they cannot payback their debts.
- empressplay 11y ago
  sounds like a great argument for an exit!
- MrBuddyCasino 11y ago
  > But it is also true that Greeks were tricked into joining Eurozone. The contrary is true. Greece faked its statistics in order to join. > I can't believe that banks and governments were so stupid that they couldn't analyze situation Of course they could, and the banks should have participated in a debt cut - they recklessly lent money to Greece in an extend & pretend scheme, cashing in on a high-risk interest rate, without actually risking a default "because bailout".
lsc 11y ago
the difference being that the whole "monetary union without fiscal union" experiment is madness and obviously doomed from the start. It's got all the downsides of the gold standard, combined with all the downsides of a fiat currency, with the advantages of neither. A big advantage of having a fiat currency is that through manipulating the money supply, a country can essentially give everyone paid in that currency a pay cut (or a raise) relative to other countries. This situation where Greece is dramatically less productive than the rest of Europe is a textbook example of when currency devaluation is appropriate... but they can't do it, because they are using the same currency as Germany and other countries that have very high productivity levels. Greece is way better off outside of the euro; loaning them more money at this point would be delaying necessary pain; and certainly, getting off the euro and bootstrapping their own currency will be painful, but... it's something they are going to have to do.
JustMeMe 11y ago
I wonder why in the US states can go bankrupt, states much larger than Greece: * Without any impact on the US $ * Without any foreign country noticing * Without pictures of suffering people What does the EU need to change? Is there cross financing in the US to states, e.g. California, which the EU does not want to do for Greece?
- gonvaled 11y ago
  > I wonder why in the US states can go bankrupt, states much larger than Greece: Is this true? Has any US state gone bankrupt? Can you share a link? The closest I know was California having some financial trouble, but no bankrupt was declared, afaik. > Without any impact on the US $ The $ is no normal currency: it is the world currency. Most international contracts are done in $. By chance (if you are charitable) or by design (if you tend to conspiracy theories, like me), the $ gives the US a huge financial advantage. The markets are rigged in favor of the $.
  - saryant 11y ago
    State governments cannot enter bankruptcy. It's prohibited by both the federal bankruptcy code and the Constitution (states can't repudiate their debt under the contracts clause).
- dragonwriter 11y ago
  > I wonder why in the US states can go bankrupt They can't. State agencies, and subdivisions of States, can enter into bankruptcy under federal municipal bankruptcy provisions, but States as such cannot. There have been some very loose discussions about the desirability of adding State bankruptcy provisions to the federal bankruptcy code over the last several years, but nothing that I am aware of even approaching a serious effort to do so.
kh_hk 11y ago
Most european countries can't keep up with the currency, that's the real issue. Of course the tax payers are highly entertained with the bigoted argument of which country deserves what. It's too easy to go that route and influence the public.
Arnt 11y ago
What IS the postwar lesson? The Germans argued, in short, that "we've changed, and because of the change the leniency will really help". The change was clear: The Bundestag didn't look like either the Weimar Reichstag or the Nazi regime. It'll be difficult for the Greek to put forward the same argument, so long as their pension scheme remains severely underfinanced, etc. Syriza's argument is basically "we suffer", which is undoubtedly true, but it's a very different argument, not one that can be supported by the German experience.
- gonvaled 11y ago
  The German change was a politic change, and was inevitable because they lost the war, and the political ideology which started it all was bankrupt, defeated and exterminated. From this politic change, they extracted a debt relief which helped them to recover. Without that, they would have languished economically, just as the Greek are doing now. The Greece change can not come because the main reason that is keeping them in crisis (the debt burden) will not disappear. That is why they are asking for debt relief: they want to bankrupt the old system.
  - Arnt 11y ago
    Quoting http://www.economist.com/blogs/freeexchange/2015/06/greek-pensions http://www.economist.com/blogs/freeexchange/2015/06/greek-pe... "Yet there was a crucial hole in the reforms: they largely sheltered older workers, so that they could retire on broadly the same terms as before. As an example, Platon Tinios, a pensions expert at Piraeus University, highlights the reform limiting the list of arduous occupations. This no longer included new hairdressers from 2012 but all those with more than ten years’ experience retained their previous right to retire five years early. The new accrual rates applied to years worked from 2011; previous years worked still benefited from the earlier more generous formula (although the resulting benefits are then subjected to the cuts applied to pensions in payment). According to Professor Tinios, “the vast majority of those planning to retire this decade are grandfathered” (shielded) from the reforms."
    - gonvaled 11y ago
spystath 11y ago
I believe the whole argument with the german postwar debt is a bit weak, the conditions are much more different now. I don't particularly like how it is being repeated over and over again, especially here (greece), as it misses the whole point. It should never be "us" vs "them" and the german debt issue it's clearly polarising towards that direction. I don't want to start analysing what has gone wrong with greece. Lots of ink has been spilled and most people have formed their opinions by now anyway. Let's just say it's a mix of reckless mid-90s to late-00s borrowing/spending and a bit of short-sightedness (or over-confidence maybe) of foreign investors. What troubles me most are two things however First, the last 5 year reforms have afflicted low/middle class households the most. Even moderate (800-900 e/mo) pensions and wages have been slashed, collective bargaining abolished, lots of small/medium businesses have gone belly up along with their employees. It was supposed to help, and I would even be OK with it. But apparently it didn't. GDP plummeted, unemployment is all-europe high, you have probably already read about it. Every 18 months there are new reforms of the same kind only to roll-over the previous bail-outs to new ones. Assuming we keep the euro and the government signs a new 2-4-year funding programme. If in 2017 the situation is the same what would be the next step? Another bail-out? When will this end? Will it end at all? Let's say that through another set of cuts and budget adjustments there is a 3% primary surplus (wildly optimistic) by the end of 2017. How good will that be with 200% debt/GDP? These are probably naive questions for someone more learned in economics but in my eyes it seems like the trial of Sisyphus[1]; the same thing over and over again. I believe that there must be a way to manage the greek debt, not write it off maybe, but ease part of its repayment. On a side-note some proposed or already implemented reforms are on good track. Ridiculously early pensions should be abolished, as they are an insult to those working hard for 40+, years and tax evasion should be tackled hard. But these things don't happen within a year, especially managing tax evasion. It's getting better but it will need time. The current government has vowed to address both, I wish they do, but I'm cautious. Second, I am totally disheartened by the way the greeks are depicted by the media. For example there was this utterly disgusting sketch[2] by a dutch newspaper. I can find more, but this is one of the more recent ones. Is this what people think of greeks? Is this how we treat people that are definitely through some hard times, even if it is partially of their own wrong-doings? Don't get me wrong, there has been also in greece some relevant comments and sketches. I disagree with them, but all of them were targeted at politicians not people. Although there are harsh feeling about Mrs. Merkel, and Mr. Schäuble, and several other high profile politicians I have heard noone to say bad things of the germans, or dutch, or whatever. On the other hand I have read some totally disgusting things for the greeks as a nation over the last few months. I'm sad and disappointed. [1]: https://en.wikipedia.org/wiki/Sisyphus https://en.wikipedia.org/wiki/Sisyphus [2]: http://www.volkskrant.nl/foto/de-cartoons-van-jos-collignon~p3761431/3147030/ http://www.volkskrant.nl/foto/de-cartoons-van-jos-collignon~...
junto 11y ago
It is worth pointing out that Syrizia didn't ask for a debt relief (reduction) in the last round of negotiations, upon which the referendum was based. They asked for a restructuring. The same amount of debt was to be owed but over a longer period of time and at a lower interest rate. The reasoning was quite simply that at the current rate and loan period, they are unable to take any advantage of the quantative easing currently being undertaken by the ECB. Varoufakis explains it quite nicely onnhis blog. The debt as it stands is unsustainable. Restructuring would help tremendously. They haven't asked for a reduction.

36 points by MrBuddyCasino 11y ago

Gossilla 11y ago

There have been several haircuts to the Greek debt, including stretching of payment goals.

halfdan 11y ago
That, and the NYTimes is ignoring it's own journalism: http://www.nytimes.com/2012/11/28/world/europe/in-germany-weighing-debt-relief-against-debt-reduction.html http://www.nytimes.com/2012/11/28/world/europe/in-germany-we...
vidarh 11y ago
Yet it's still nowhere near sustainable levels.
de_Selby 11y ago
And no matter how many lazy op-eds are written saying it, this isn't simply a matter of Greece and Germany. A dept write-off would have huge knock-on effects in the rest of Europe, with Ireland, Portugal, Spain also then looking for similar write-offs. Not to mention the crippling Italy, France and Germany's banks. The money has to come from somewhere.
- digitalengineer 11y ago
  Everybody own everybody money lots of money. How about swapping all this debt and writing it off? See this 3 min. video by two English comedians: https://www.youtube.com/watch?v=YNA2VG_piUo https://www.youtube.com/watch?v=YNA2VG_piUo
- fineman 11y ago
  No chance it could come from the banks that made the bad loans? You know, make the criminals pay. I imagine that would have more impact than making the victims pay.
  - malka 11y ago
    That would go against the very purpose of a bank : privatize what you earn, share your losses.
rtpg 11y ago
I thought there was only one debt devaluation (50-odd percent in 2010), but it was combined with austerity measures that destroyed any potential of growth.
- verinus 11y ago
  i thought that prior to syriza election there was a positive development in the greek economy?

dmichulke 11y ago

Germans Forget Postwar ... Most people these days are unable to distinguish between people and their government. They assume that governments act on behalf of the people, yet, somehow they always claim they don't feel represented by their government. A sad world. EDIT: "changed government and its people" to "people and their government", added title

Hermel 11y ago
In that case, we should discuss helping the people, and not discuss helping the Greek government. In fact, Europe is already helping hundreds of thousands of Greeks by offering them good jobs in other countries.
- melling 11y ago
  6 in 10 Greeks don't pay taxes. Tax evasion is common. http://www.cnn.com/2010/WORLD/europe/12/31/greece.taxes/ http://www.cnn.com/2010/WORLD/europe/12/31/greece.taxes/ http://boingboing.net/2010/05/04/satellite-photos-cat.html http://boingboing.net/2010/05/04/satellite-photos-cat.html Have they fixed the early retirement issue? http://www.businessinsider.com/greece-germany-pensions-2010-4?op=1 http://www.businessinsider.com/greece-germany-pensions-2010-... http://greece.greekreporter.com/2014/12/04/75-of-greek-pensioners-enjoy-early-retirement http://greece.greekreporter.com/2014/12/04/75-of-greek-pensi...
  - BBlarat 11y ago
    yes, the average greek retires at 62 and the average european retires at 60. http://www.oecd.org/els/emp/ageingandemploymentpolicies-statisticsonaverageeffectiveageofretirement.htm http://www.oecd.org/els/emp/ageingandemploymentpolicies-stat...
    - creshal 11y ago
      What lazy bast… Ach, scheiße.
    - melling 11y ago

ben_bai 11y ago

There is a slight difference between a country defeated twice with millions dead an bomb to ashes and a country in debt because of "cheap" loans. thats the tl;dr explaination.

rtpg 11y ago
if you read the article, you'd see that it's not just postwar Germany, but many other countries who only recover after a massive devaluation of their debt. Besides, austerity has proven countless times not to work, so why would Germany keep on insisting on it?
- digitalengineer 11y ago
  It's part of their (and our Dutch) culture. Protestant / Calvinist. 'We were born in to sin and must work hard to reach paradise'. This is why the Greek bashing in the papers has been so effective. They were 'lazy, bureaucrats, and what not. (Southern country's are more laid back. Catholic faith has forgiveness and starting over as main themes.
  - mafribe 11y ago
    Greek bashing? The Greek airforce has [1] 156 F-16s, an airplane that's $165 million a piece new. Why on earth does Greece, a NATO country need 156 F-16s? Could they easily be sold for a couple of billions on the second hard market? Nah perish the tought! Greece needs to be the largest importer of conventional weapons in Europe and its military spending must be the highest in the European Union (relative to G.D.P) [2]. Greece must be “by far” the country with the largest share of military personnel to population in the EU. [1] https://en.wikipedia.org/wiki/List_of_aircraft_of_the_Hellenic_Air_Force https://en.wikipedia.org/wiki/List_of_aircraft_of_the_Hellen... [2] https://en.wikipedia.org/wiki/Military_of_Greece#Conscription.2C_budget.2C_international_operations https://en.wikipedia.org/wiki/Military_of_Greece#Conscriptio...
    - digitalengineer 11y ago

ghshephard 11y ago

As a Canadian living in Singapore I have no skin in this game, but here's a counterpoint: http://www.bloombergview.com/articles/2015-01-27/germany-deserved-debt-relief-greece-doesn-t-i5fdca2y http://www.bloombergview.com/articles/2015-01-27/germany-des... The kind of summary (though the article is short and worth reading, if only to get some balance): There is a not-so-subtle difference between voluntarily taking on debts made by previous, rogue governments at a currency rate favorable to the creditors -- and heedlessly accumulating debts of one's own while concealing the true size of budget deficits. In the first case, the implication is harsh self-imposed discipline and penitence. In the second case, profligacy. For those inclined to dig in and do deeper research, http://library.fes.de/pdf-files/iez/10137.pdf http://library.fes.de/pdf-files/iez/10137.pdf and in particular http://papers.ssrn.com/sol3/papers.cfm?abstract_id=493802 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=493802 give lots of great details on what happened back in 1953 with Germany.

elorant 11y ago
From the article: "There are ruins at the center of Athens, too, but they are rather more ancient." This insults us. Germans left Greece literally in ruins. The author of the article obviously don't know shit about history. I'm not surprised, even Germans chose to neglect their atrocities. Please people, become a little more informed about what Germany did to my country during the war. It might be irrelevant to the current situation but for us Greeks it is all about justice. In our five thousands years of history no other invading nation inflicted as much damage as Germany. Germans are the most ungrateful fuckers there are.
- saryant 11y ago
  I think that's an unfair characterization. We're talking about a country that requires its schoolchildren to tour the remnants of a genocide committed only 70 years ago. To say that Germany "neglects their atrocities" is, IMO, out of line. http://www.quora.com/What-is-it-like-for-people-growing-up-in-Germany-to-learn-about-the-Holocaust-in-school http://www.quora.com/What-is-it-like-for-people-growing-up-i...

arkj 11y ago

I don't think you can compare the post war scene with today's Greece. At least the author doesn't provide any data to justify why the debt should be written of except that people are unemployed and pensioners are suffering. Now that is not to say that let people suffer. But i think the broader issue is Tsipras has no plan. They just want the debt to be written off and expect that the economy will recover through some magic. Thomas Piketty is arguing along the similar lines but it think from the perspective that the creditors austerity policy has failed. http://www.thenation.com/article/austerity-has-failed-an-open-letter-from-thomas-piketty-to-angela-merkel/ http://www.thenation.com/article/austerity-has-failed-an-ope... The creditors are saying keep taking a haircut till you recover, and the debtor is saying, Sir that what we've been doing and we are getting into deeper trouble. Are we running out of economic imaginations? Maybe we need more of startup thinking in the space of economy.

gonvaled 11y ago
Writing off the debt is the magic when the debt is as huge as it is for Greece. Extending maturity and / or reducing interest rates do not help much if you know that whatever improvements you make to your economy will be swallowed by the financial markets in the future (since the debt still exists). You are a slave country (all countries are dependent on the financial markets in more or less measure, but Greece has completely lost its freedom) Would you work to pay for your student loans if you realized that you will never be able to pay it back, in your whole work life, and that you will be subject to the dictate of your creditors forever? If default was not an option (you can not default on student debt in the US?), I would just leave the country.

mhd 11y ago

"Greece has done little to address its endemic economic mismanagement. But it has few incentives to do so if the fruits of economic improvements will flow to its creditors." Ah, the good ol' Nirvana fallacy.

Tomte 11y ago

"Germany vs. Greece" is a compelling and intriguing narrative, but there 17 more Eurozone members. And some of them take a much tougher stand towards Greece than Germany does. Ask Lithuania how happy they are to pump money towards a country that is richer than they are themselves. Of course, Germany has a lot of influence. But everytime I see articles riffing off this Germany vs. Greece theme, I tend to discount them as shallow.

luso_brazilian 11y ago
As this is basically a repeat of the Picketty article recently posted here I'll repost my comment from there to help in the understanding that it is not only Germany that have contributed into the Greek bailout fund. 1. Meet Portugal (my country). Some may know us derisively as the P in PIGS because of our financial problems (much similar to the Greek one in nature and extent). In 2010 and 2011 as one of the 14 member states of the EU that were part of the Greek loan facility Portugal contributed with 1102 million euros into the 52.9 billion loan that greece received [1]. Yes, that's correct, not all of the debt that people are so eager to expect that German forgives is from their coffers, it was actually pooled from the following countries: Belgium, Cyprus, Germany, Estonia, Finland, France, Ireland, Italy, Luxembourg, Malta, Netherlands, Austria, Portugal, Slovenia, Slovakia and Spain. 2. As you may know, about the same time we had our own problems and also had to be bailed out. As part of the measures put in place to reduce our deficit a massive tax hike was implemented in the end of 2012 [2] I'll draw attention to single one of those measures: the 3.5% extraordinary tax on the income paid by every single person with income above minimum wage (485€/month) including pensioners. Now, for the money quote [3]: "Minister of Finance Vitor Gaspar said the tax would bring in 1025 million euros". Less than what Portugal contributed to the Greek bailout fund. 3.5% of the income of every citizen in this country. In conclusion, that's one of the reasons for the nationalistic outrage against Greece defaulting the loan. It is not only the money of the richest bankers of Europe that won't be repaid, it is the taxpayer money of each of those countries that contributed to their rescue. To put in perspective, 1102 million euros means that default would cost every inhabitant in this country 110 euros (about 330€ per household) and not only hypothetically but in practice too as demonstrated above. [1] http://www.rekenkamer.nl/english/Publications/Topics/EU_governance_to_combat_the_economic_and_financial_crisis/Financial_stability_instruments/Financial_instruments/Greek_loan_facility http://www.rekenkamer.nl/english/Publications/Topics/EU_gove... [2] http://edition.cnn.com/2012/12/31/business/portugal-fiscal-tax-increase/ http://edition.cnn.com/2012/12/31/business/portugal-fiscal-t... [3] http://www.eurofound.europa.eu/observatories/eurwork/articles/other/governments-first-bill-taxes-christmas-allowance http://www.eurofound.europa.eu/observatories/eurwork/article... P.S. As one of the most common responses to was that the money didn't went to Greece but to its creditors (without improving the Greek situation) I must add that I agree it is a valid point. But is not related to the fact that the European fund raised to Greece was not money coming from an abstract concept of Europe or from the coffers of the Germans alone but directly from the taxpayers of each of the countries mentioned above. That is the point being made, not that the bailout shouldn't have happened but that it happened and an eventual default won't be on Germany alone.

lyschoening 11y ago

I don't think there is any German who hasn't heard about the debts of WWI, and the debt relief that came after WWII. The reason Germans are opposed to debt relief for Greece is that they have read about Greek nepotism in the public sector, tax avoidance, and other corruption while Greek reforms have not been forthcoming. To the average German voter money for Greece without reforms is pouring water into a broken bucket.

verinus 11y ago
i always ask: why should european tax payers pay for a greek state when the greeks themselves dont pay their taxes?

jkot 11y ago

There is lot of stuff like 'Merkel with mustache' in Greece, it is bit tiring. I would not expect it to reach HN front page. Anyway if debt relieve, why Greece? It is well developed country with good infrastructure. Lets send those money to countries which need it more.

empressplay 11y ago

Children suffer when their parents are forced to pay their debts or go into bankruptcy, and certainly nobody lends these families any more money with which to continue their lifestyle. How is a Greek citizen any different than a child with financially-stressed parents? Why can't we write off their debts? Seems unfair to me.

gonvaled 11y ago
People can declare bankruptcy (in lots of countries), and children do no need to inherit debts (they will not inherit assets either, of course)

piokoch 11y ago

Greek crisis has two faces. It is true that Greeks introduced crazy socialistic ideas like having written down in the constitution the law that civil servant cannot be made redundant. It ended up with huge number of employed officials doing nothing. It is also true that Greeks made cheating on taxes a pure art (and I am speaking this as a Polish, and people in Poland are not exactly rushing to pay taxes). Covering pools with a military masking net to avoid tax or things like hiding relatives death for many years to get their pension are kind of unusual practices. This pathologies are partly caused by absurd tax regulations, though, so I wouldn't attribute it to "Greek nature", as some people do. But it is also true that Greeks were tricked into joining Eurozone. They had rather weak economy without well developed modern industry. As long as they had drahma, Greek products were cheap, Greece was also cheap as a touristic destination. It has all changed, when they joined Eurozone, this hasn't improved their economy, but made their often low quality products expensive. Who was main beneficiary of this? Obviously Germany, before Euro Deutsch Mark was becoming a very strong currency, so German products were expensive (similarly to Swiss Franc). Introducing Euro changed that. Right now German economy is blooming, they are about to have zero debt budget next year and the rest of Eurozone is kind of in trouble. The other thing, Greeks were actively encouraged to take credits (I can't believe that banks and governments were so stupid that they couldn't analyze situation). Greeks spent those money on products bought abroad (with Germany as a big seller). Greeks bought a lot of military equipment in Germany, for instance. So, Greeks made others rich in that way. Now they are left with top quality war ships, but they cannot payback their debts.

empressplay 11y ago
sounds like a great argument for an exit!
MrBuddyCasino 11y ago
> But it is also true that Greeks were tricked into joining Eurozone. The contrary is true. Greece faked its statistics in order to join. > I can't believe that banks and governments were so stupid that they couldn't analyze situation Of course they could, and the banks should have participated in a debt cut - they recklessly lent money to Greece in an extend & pretend scheme, cashing in on a high-risk interest rate, without actually risking a default "because bailout".

lsc 11y ago

the difference being that the whole "monetary union without fiscal union" experiment is madness and obviously doomed from the start. It's got all the downsides of the gold standard, combined with all the downsides of a fiat currency, with the advantages of neither. A big advantage of having a fiat currency is that through manipulating the money supply, a country can essentially give everyone paid in that currency a pay cut (or a raise) relative to other countries. This situation where Greece is dramatically less productive than the rest of Europe is a textbook example of when currency devaluation is appropriate... but they can't do it, because they are using the same currency as Germany and other countries that have very high productivity levels. Greece is way better off outside of the euro; loaning them more money at this point would be delaying necessary pain; and certainly, getting off the euro and bootstrapping their own currency will be painful, but... it's something they are going to have to do.

JustMeMe 11y ago

I wonder why in the US states can go bankrupt, states much larger than Greece: * Without any impact on the US $ * Without any foreign country noticing * Without pictures of suffering people What does the EU need to change? Is there cross financing in the US to states, e.g. California, which the EU does not want to do for Greece?

gonvaled 11y ago
> I wonder why in the US states can go bankrupt, states much larger than Greece: Is this true? Has any US state gone bankrupt? Can you share a link? The closest I know was California having some financial trouble, but no bankrupt was declared, afaik. > Without any impact on the US $ The $ is no normal currency: it is the world currency. Most international contracts are done in $. By chance (if you are charitable) or by design (if you tend to conspiracy theories, like me), the $ gives the US a huge financial advantage. The markets are rigged in favor of the $.
- saryant 11y ago
  State governments cannot enter bankruptcy. It's prohibited by both the federal bankruptcy code and the Constitution (states can't repudiate their debt under the contracts clause).
dragonwriter 11y ago
> I wonder why in the US states can go bankrupt They can't. State agencies, and subdivisions of States, can enter into bankruptcy under federal municipal bankruptcy provisions, but States as such cannot. There have been some very loose discussions about the desirability of adding State bankruptcy provisions to the federal bankruptcy code over the last several years, but nothing that I am aware of even approaching a serious effort to do so.

kh_hk 11y ago

Most european countries can't keep up with the currency, that's the real issue. Of course the tax payers are highly entertained with the bigoted argument of which country deserves what. It's too easy to go that route and influence the public.

Arnt 11y ago

What IS the postwar lesson? The Germans argued, in short, that "we've changed, and because of the change the leniency will really help". The change was clear: The Bundestag didn't look like either the Weimar Reichstag or the Nazi regime. It'll be difficult for the Greek to put forward the same argument, so long as their pension scheme remains severely underfinanced, etc. Syriza's argument is basically "we suffer", which is undoubtedly true, but it's a very different argument, not one that can be supported by the German experience.

gonvaled 11y ago
The German change was a politic change, and was inevitable because they lost the war, and the political ideology which started it all was bankrupt, defeated and exterminated. From this politic change, they extracted a debt relief which helped them to recover. Without that, they would have languished economically, just as the Greek are doing now. The Greece change can not come because the main reason that is keeping them in crisis (the debt burden) will not disappear. That is why they are asking for debt relief: they want to bankrupt the old system.
- Arnt 11y ago
  Quoting http://www.economist.com/blogs/freeexchange/2015/06/greek-pensions http://www.economist.com/blogs/freeexchange/2015/06/greek-pe... "Yet there was a crucial hole in the reforms: they largely sheltered older workers, so that they could retire on broadly the same terms as before. As an example, Platon Tinios, a pensions expert at Piraeus University, highlights the reform limiting the list of arduous occupations. This no longer included new hairdressers from 2012 but all those with more than ten years’ experience retained their previous right to retire five years early. The new accrual rates applied to years worked from 2011; previous years worked still benefited from the earlier more generous formula (although the resulting benefits are then subjected to the cuts applied to pensions in payment). According to Professor Tinios, “the vast majority of those planning to retire this decade are grandfathered” (shielded) from the reforms."
  - gonvaled 11y ago

spystath 11y ago

I believe the whole argument with the german postwar debt is a bit weak, the conditions are much more different now. I don't particularly like how it is being repeated over and over again, especially here (greece), as it misses the whole point. It should never be "us" vs "them" and the german debt issue it's clearly polarising towards that direction. I don't want to start analysing what has gone wrong with greece. Lots of ink has been spilled and most people have formed their opinions by now anyway. Let's just say it's a mix of reckless mid-90s to late-00s borrowing/spending and a bit of short-sightedness (or over-confidence maybe) of foreign investors. What troubles me most are two things however First, the last 5 year reforms have afflicted low/middle class households the most. Even moderate (800-900 e/mo) pensions and wages have been slashed, collective bargaining abolished, lots of small/medium businesses have gone belly up along with their employees. It was supposed to help, and I would even be OK with it. But apparently it didn't. GDP plummeted, unemployment is all-europe high, you have probably already read about it. Every 18 months there are new reforms of the same kind only to roll-over the previous bail-outs to new ones. Assuming we keep the euro and the government signs a new 2-4-year funding programme. If in 2017 the situation is the same what would be the next step? Another bail-out? When will this end? Will it end at all? Let's say that through another set of cuts and budget adjustments there is a 3% primary surplus (wildly optimistic) by the end of 2017. How good will that be with 200% debt/GDP? These are probably naive questions for someone more learned in economics but in my eyes it seems like the trial of Sisyphus[1]; the same thing over and over again. I believe that there must be a way to manage the greek debt, not write it off maybe, but ease part of its repayment. On a side-note some proposed or already implemented reforms are on good track. Ridiculously early pensions should be abolished, as they are an insult to those working hard for 40+, years and tax evasion should be tackled hard. But these things don't happen within a year, especially managing tax evasion. It's getting better but it will need time. The current government has vowed to address both, I wish they do, but I'm cautious. Second, I am totally disheartened by the way the greeks are depicted by the media. For example there was this utterly disgusting sketch[2] by a dutch newspaper. I can find more, but this is one of the more recent ones. Is this what people think of greeks? Is this how we treat people that are definitely through some hard times, even if it is partially of their own wrong-doings? Don't get me wrong, there has been also in greece some relevant comments and sketches. I disagree with them, but all of them were targeted at politicians not people. Although there are harsh feeling about Mrs. Merkel, and Mr. Schäuble, and several other high profile politicians I have heard noone to say bad things of the germans, or dutch, or whatever. On the other hand I have read some totally disgusting things for the greeks as a nation over the last few months. I'm sad and disappointed. [1]: https://en.wikipedia.org/wiki/Sisyphus https://en.wikipedia.org/wiki/Sisyphus [2]: http://www.volkskrant.nl/foto/de-cartoons-van-jos-collignon~p3761431/3147030/ http://www.volkskrant.nl/foto/de-cartoons-van-jos-collignon~...

junto 11y ago

It is worth pointing out that Syrizia didn't ask for a debt relief (reduction) in the last round of negotiations, upon which the referendum was based. They asked for a restructuring. The same amount of debt was to be owed but over a longer period of time and at a lower interest rate. The reasoning was quite simply that at the current rate and loan period, they are unable to take any advantage of the quantative easing currently being undertaken by the ECB. Varoufakis explains it quite nicely onnhis blog. The debt as it stands is unsustainable. Restructuring would help tremendously. They haven't asked for a reduction.