Greece has already had quite a bit of debt relief, it just did not seem to make much of a difference. And as long as they don't have an IRS with teeth and are willing to go after the black money parked in .ch the current situation will likely remain.
It's a structural Greek problem, not a German one.
The black economy is a symptom of the problem not the cause
If you were Greek (Especially a young Greek) and had no prospects for a future and no hope for job in a country with highest unemployment (especially among the youngest) in EU, the black economy might be very attractive...
Also I am sure the "I did not cause this debt hence why should I pay taxes for it" attitude might be very prevailent
And do you blame them? You might feel all fine and mighty sitting in your chair reading HN (probably while at work) towards those "lazy" Greeks, but all you have to do is imagine yourself in the same situation.
The Greek economy already has contracted more and for longer than the US during the Great Depression (which did not have a larger debt burden then), let that fact focus your mind, here is a graph
The black economy is a symptom of the problem not the cause
8| What sort of weird alternate universe can this sort of statement come from? Are you claiming tax dodging would go away if there wasn't austerity? So, 8 years ago there was no tax evasion in Greece, or at least no more than average?
Tax dodging will never go away, every economy has it, some companies from the likes of the US make an artform out of it especially the large majority funneling money via my country, Ireland.
While I do not condone it, it is plainly obvious that the average person in Greece will have no "ethical" issues dodging taxes especially seeing that unemployment is high (hence black/gray economy might be the ONLY choice) and many people especially the younger generation did not rack up this debt and are the ones suffering the most, might rightly be asking themselves why they should be the ones suffering and paying for it via taxes.
The very reason they're in this predicament is that they don't pay taxes. And no, it's not just the 'magnates' (whatever that means) - it's everybody. They can't collect on 15 billion dollars a year, if they had collected just half of that the last 5 years, there would now not be a problem at all! Look, it doesn't make sense to argue with you since you clearly have no idea what you're talking about (no, US companies do not 'dodge' tax through Ireland, they'd be raped by the IRS if what they did was illegal), it's just that populist blaring like yours seems to take over any discussion on this topic - which I have fully internalized after 20 years on the internet, and still sometimes it irks me.
It's funny how a very large part of this is because Greece is still for small transactions very much a cash society and that means that it is relatively easy to keep things off the books. The irony is that the current situation will make sure that nobody in Greece will ever trust a bank again and that in turn will make it a lot harder to collect those taxes.
As some one who comes from a country where tax evasion is common(India), I can tell you Greece's problems have just begun. And its not like introducing plastic money or online transactions will fix anything here. By now most of the Greeks would be so mentally conditioned to not paying taxes, any attempt from the government to make them pay will come across as a being handed out a very unfair deal. Most will feel cheated and being asked to make sacrifices out of their way.
In fact this is the reason why its so difficult to turn around things in such countries. The issue is not technology or government policy. When you have a whole generation of people grow up in such a ecosystem, these practices seep into your culture and everyday life. You can only undo them gradually overtime, and sometimes it takes 2-3 generations to get out of it.
Another defining characteristic of a society where cash transactions are common - Every day corruption is omnipresent.
It's a very long and extremely uphill road for Greece from here on in, they actually had a fighting chance about 5 years ago. The problem is that the rest of the EU took Greece by their word without proper oversight of whether or not the agreed upon path was actually followed. You can't simply turn Greece into Germany overnight the mentality chance along would take decades.
"It's a structural Greek problem, not a German one."
If that's so... and I generally agree it is... then why do people keep lending them money? Or perhaps rather, "lending" them money?
I actually find that a rich and interesting question not amenable to snap answers. But it doesn't make anybody involved look very good or ethical. Call it old fashioned of me, but neither borrowing money that you basically know you can't be paid back, nor lending money you basically know can't pay back, is very ethical. (Perhaps that's why the discussions about who's at "fault" keeps going around so viciously... the answer isn't "A XOR B", the answer is the union of everybody involved.)
> If that's so... and I generally agree it is... then why do people keep lending them money? Or perhaps rather, "lending" them money?
Most of the money that's being lent is for repaying existing debts that come due. Like any bankruptcy (which is what this is, formally declared or not), the ECB is trying to smooth out the process and ensure creditors are treated equitably. As for "keeping lending them money", the bailout loans are tied to political reforms intended to fix the problems. How else would you do it?
If you're asking why creditors lent them money in the first place, a lot of that predates the financial crisis. A lot of it was before rampant fraud in Greek governmental accounting became apparent. And perhaps people had more faith in European integration and expected Germany to pay Greece's debts if they ever get into trouble.
Me personally? Try a lot harder to not get into that problem in the first place.
I don't mean that sarcastically or as a snap answer exactly. My views on debt are right now somewhat old fashioned, and they're getting older-fashioned pretty quickly, directly in response to current events. Humans have a long experience with debt, a lot of that experience has boiled down to "treat it as radioactive waste", and I'm increasingly unconvinced that all of our fancy financial tools have actually removed the underlying reasons for that millenia-old assessment, rather than pushing those reasons around with ever-more sophisticated tools into ever-more complicated cognitive blind spots, until one day it blows up even worse than it used to be able to.
A sober analysis of a lot of the debt in the world right now is that it simply isn't going to be repaid, for mathematical reasons, and that's been true for quite a while now. (The crisis merely revealed what should already have been obvious, and it is obvious that many people still don't think this is true even after that.) And a lot of that debt has been moved behind things like "guaranteed pensions" and other things that are amenable to various forms of jiggery-pokery on the accounting.
So, that's great and all, but what do we do now, right? Because no amount of wishing for changes in the past will cause them to manifest. To which my answer is basically sunk-cost fallacy, stop throwing good money after the bad. Political restructurings don't appear to be working, so stop that. But then, I'm an engineer, not a politician... "stop doing things that don't work" is very easy for me but might as well be a concept from the planet Vulcan for a politician, who is so full of nuance that they can talk themselves right out of reality and consider it not merely moral, but noble.
> I don't mean that sarcastically or as a snap answer exactly. My views on debt are right now somewhat old fashioned, and they're getting older-fashioned pretty quickly, directly in response to current events. Humans have a long experience with debt, a lot of that experience has boiled down to "treat it as radioactive waste", and I'm increasingly unconvinced that all of our fancy financial tools have actually removed the underlying reasons for that millenia-old assessment, rather than pushing those reasons around with ever-more sophisticated tools into ever-more complicated cognitive blind spots, until one day it blows up even worse than it used to be able to.
It seems to me to be the opposite - most of the crises are caused not by the algorithmic side but by the human side. E.g. LCTM's positions famously were profitable - eventually, if humans hadn't panicked and forced them to sell off. More recently, a lot of the subprime CDSes never actually paid out - it's just that people worried, and lowered the value of them. As was said of a recent DeutscheBank lawsuit, "Lehman would still be in business if they hadn't had to mark their positions to market".
> So, that's great and all, but what do we do now, right? Because no amount of wishing for changes in the past will cause them to manifest. To which my answer is basically sunk-cost fallacy, stop throwing good money after the bad. Political restructurings don't appear to be working, so stop that. But then, I'm an engineer, not a politician... "stop doing things that don't work" is very easy for me but might as well be a concept from the planet Vulcan for a politician, who is so full of nuance that they can talk themselves right out of reality and consider it not merely moral, but noble.
So you're saying a lot of self-righteous words there, but what are you concretely proposing? Just cut Greece off, revoke their authority to print Euros, and leave them to fend for themselves with their creditors? That is certainly an option, but it's not without costs to say the least. Arguably even if that ends up happening, by muddling through for a bit first we've made things better than they would have been. You can only say the things we've been doing "don't work" if you're confident things wouldn't have been worse without them. The current approach is certainly undignified, but fundamentally I wouldn't say it doesn't work.
"That is certainly an option, but it's not without costs to say the least."
I believe I was pretty clear that none of the options are good right now.
And while that doesn't solve the problem we face now by any means, we must also not fall into the trap of being so focused on the near-term that we forget to learn from what happened, which I think is where we are now. It is probably rational for a lot more governments to start getting a lot more nervous about debt load, but instead we've all but talked ourselves into the belief that debt-fueled government spending is a moral necessity, and anyone who disagrees is an idiot. I hope that's right, even as I fear it's not (it's very ahistorical, if nothing else), because it's certainly the path we're committed to now.
"The current approach is certainly undignified, but fundamentally I wouldn't say it doesn't work."
It hasn't worked yet. It has perhaps not "failed" yet, but it certainly hasn't "worked". I recognize this is not a contradiction of what you said, but the same sort of idea through a different linguistic lens.
I consider this as part of the larger picture. We're still in the 2008 crisis, still marching along, still using the same techniques to resolve it. In that sense, this has failed; we're still in 2008, we have no immediate prospect of escaping from it, and our current plan is to continue doing the same things. I feel I'm justified in questioning why our "solutions" are doing so poorly.
I truly hope that you get to continue saying that this hasn't failed for a lot longer, but I fear that we are still in a situation where 2008 was still only the opening salvo, that the "solution" to 2008 was whackloads more debt for everybody, and that the next time the world economy burps it's going to go much worse because that option will have been played out. If this isn't failure, it sure isn't success.
If Greece had collapsed in 2010, the rest of Europe would have been hurt somewhat badly. By buying five years, the rest of Europe was able to position themselves so that a Greek collapse would not hurt them nearly so badly.
It is my impression that Greece did not use those five years nearly so wisely, but that's a different issue.
Let's look at it this way. What if they take that seriously and stop lending them money now?
Please note the amount of diplomatic and geo-political pressure being put on other european countries/creditors currently to bail them out and give them more funds. So this is damned if you do, and damned if you don't kind of a situation.
If what you said is taken seriously, Greece will not get a single penny now either in bail out money or other recovery loans.
The bailout made a big difference to the banks who got the bailout money. It didn't help Greece's economy, because the bailout wasn't used as a stimulus package.
The dysfunctional tax system in Greece isn't the cause of the crisis. But people keep bringing it up because once the people of Greece can be depicted as corrupt and lazy we can morally justify any amount of hardship we force on them.
The problem with Greece is entirely structural. But the fundamental problem is that Greece doesn't have an economy that's strong enough to compete with northern Europe without substantial subsidies. Everything else is minor in comparison.
Its like a person is their late 40's, who was born into a very rich family and has now spent all their money to bankruptcy. Having not done any serious work all their lives and now expects friends and near family to continue to fund their life as it was, just because they think they are entitled to be rich regardless of their decisions and actions in life.
You can give all the money to such people and they will only want more, it will fix nothing because they think they are 'entitled' to the free money. They will do no real work because they never have, and it will too painful to get off their high horse and realize they are subject to same standards as every one else in the world.
What? Did Greece just emerge from the largest military conflict on the planet utterly destroyed? Or did they more or less mismanage their eco? Not collecting taxes and generous retirements (hair dressing considered hazardous as mining thus eligible for early retirement, for example) is not comparable to emerging battered and destroyed from the bloodiest conflict in history.
And it's not as if their debt hasn't been restructured.
> What? Did Greece just emerge from the largest military conflict on the planet utterly destroyed?
No, but neither did Germany. In fact, despite bombings etc. the industrial infrastructure post-war was bigger than 1933 (because it was heavily built out during that period).
No, it was destroyed. We relieved their debt because we didn't want them to have to take wheelbarrows full of money to buy loaves of bread as happened after the treaty of Versailles which plunged Germany into nationalism and anti-west sentiment and gave rise to the socialist regime which brought on WWII.
And beside the infrastructure destruction there were the ravages of war, disease, psychological, nutrition, etc.
Not to mention the obvious generation of men who died. A whole generation of men dead from warring.
Heres a documentary from German public television. The interesting part starts at 4:20. I hope you can hear the English language, it has been dubbed in German:
Obviously the situations aren't the same, but are you saying that Germany deserved more lenient terms in the late 1940s than Greece does now? It seems to me that we ought to be more lenient with the country that didn't just go out and kill a couple dozen million people in an attempt to conquer the world.
>that didn't just go out and kill a couple dozen million people in an attempt to conquer the world.
Every country that has been a world power is pretty much guilty of this. Why aren't we picking on the English for the old empire or the thousands of wars and skirmishes on the continent between these powers? Or on the crusades? Picking on Germany is stupid and more Yanis Varoufakis-like hysterics. His over-the-top rhetoric and calling his own lenders "terrorists" is what's wrong with the world, not what's right.
Apparently, Greeks are willing to say or do anything except actually collect taxes and cut public spending. Thus far, Greece has been on the receiving end of historically generous loans.
The Crusades were hardly an attempt to "conquer the world". For the most part it was an attempt to counter already occurring aggressive, violent Islamic expansion.
It's nothing to do with "picking on" Germany. Merely pointing out that immediately after they went out and did this, and destroyed their own country in the process, they got really favorable terms to rebuild. And now they're insisting on harsher terms for others.
Why did Germany deserve better terms after their adventures? Or if it's not a matter of deserving them but just a purely pragmatic question of those terms being useful to avoid a future catastrophe, why doesn't that pragmatism apply here?
> Why did Germany deserve better terms after their adventures? Or if it's not a matter of deserving them but just a purely pragmatic question of those terms being useful to avoid a future catastrophe, why doesn't that pragmatism apply here?
It was even more "pragmatic" than that; it wasn't about preventing German civilians from starving or anything so humanitarian, it was the US wanting to stop the spread of communism. There's no similar "threat" in Greece today. Maybe if IS starts getting recruits near Greece the calculus will change.
I respectfully disagree. 50% of the impetus to "save Greece" has a lot to do with not letting Greece fall into Putin's sphere of influence and potentially losing a strategic NATO ally. Tsipras has visited the Russian embassy many times and has flown to Moscow a couple times as well. These weren't social calls and the agenda was kept secret for a reason. Greeks admire Marxism and the old USSR and probably wouldn't mind moving into a Russian sphere of influence, either, especially if Russian taxpayers foot the bill for their unaffordable social programs. EU negotiators are dealing with a lot more than just pensions and lack of tax collection here. They're dealing with a potential Russian base, missiles, AA, subs, warships, etc permanently on their border and aimed at their capitals and civillian centers. The Ukrainians are a good example of what happens when the Russian military is your neighbor.
Allowing Russia to trivially attack their borders and put up a Mediterranean blockade is unacceptable to the EU/NATO, but Tsipras is probably crazy enough to make this happen unless he gets the terms he demands. That said, the firing of Yanis Varoufakis probably means Tsipras is serious about cutting down the stupid Greek extremism that has made these talks impossible and probably wants to stay in the EU/Eurozone/NATO and will play ball on some level. I guess we will see.
Exiting the Eurozone, which is what Grexit is all about, doesn’t mean we’ll exit the European Union too. We have no reason to do this and no one in Europe has ever made a hint about it. And then even that wouldn’t be enough for Russians to get a base here. We’d also have to exit the NATO alliance which we’ll never do because it ensures that Turkey can’t attack us since they’re a member too. And on top of that we’d also have to ask US to leave the naval base they have in Crete. All in all, we’d have to alienate pretty much everyone in the western world to allow Russians to get a foothold here. And besides, what’s the point? We don’t trust Putin and he certainly doesn’t have the money to bail us out.
It wasn't immediately. In the years after the war, Germany was pillaged of any industrial infrastructure, Germans were put into slave labor to "compensate damages", population was mostly left to starve.
After the war, instead of being repatriated , millions of German POWs were put into forced labor by the former Allies. Some were kept by the soviets until the mid and late 50's.
Millions are still officially listed as missing, mostly sent to slave labor camps in Siberia.
Also, international humanitarian aid to Germany was initially forbidden. There were mass rapes (some estimates put victims at 2 million German woman) and massive famine (people going through winters with 1000-1500 calories per day).
The general idea after WW2 was to completely obliterate Germany, so it would never rise again. The change in mindset only came when Western countries realized that a strong Germany was the only effective defense agains Soviet expansion.
In the meantime, Greeks are worried that their fat retirement funds and unemployment insurance will be cut...
>Western countries realized that a strong Germany was the only effective defense agains Soviet expansion.
This makes no sense. The atrocities you list were almost all done by the Soviets, yet you somehow blame the West? The West invested into West Germany from the beginning (Im not arguing this, it takes time to ramp up rebuilding and yes there was a real lag period of post-war crazyiness, fatigue, and lack of money. We had our own dead to bury and our own economies to fix up first) and tried to build Berlin as a model Western city. Yeah, the Soviets did fuck all, but the western side was a totally different story.
Also, there's nothing wrong with forcing soldiers to rebuild what they broke. Oh you guys thought you could drop bombs and mortars endlessly and just go back home? This story should be a message to the young people clamoring for war today. If you lose, its not all hugs and sunshine. Its years of back-breaking work to undo the damage you have done.
I'm not blaming anyone, just comparing the situation in Greece and post-WW2 Germany. All sides committed atrocities, but the Soviets' were by far the worst.
West didn't "invested into West Germany from the begininng". Seriously, read the links I posted.
"Also, there's nothing wrong with forcing soldiers to rebuild what they broke."
Geneva conventions?
I'm not defending German actions or anything. I'm just showing that there's absolutely no way to compare Greece and post-WW2 Germany.
I'm not blaming anyone, just comparing the situation in Greece and post-WW2 Germany. All sides committed atrocities, but the Soviets' were by far the worst.
Were they? During the siege of Stalingrad, Nazis were hanging dead bodies of kids [1] in the streets to demoralize the soviet troops. Of course it worked the other way, Soviets were so much infuriated by this that they fought to the last man.
You have some audacity coming here and making such claims.
In the meantime, Greeks haven't gone out to murder half the world in a very, very long time.
Yeah, the Germans suffered a lot after the war. But what do you expect to happen after the unbelievable suffering they inflicted on so many? The conditions you describe are pretty minor compared to what they put others through beforehand.
Now, that's not to say they deserved to suffer. Many, perhaps most, of those people were still innocent. But of course the same goes for the Greeks. Very few Greeks actually caused this debt crisis themselves, while many of them are now suffering for it.
Germans were forced into slave labor? They did it to others first, and worse. Germans starved? They starved others first, and worse. And yet despite never coming anywhere close to repaying the damage (how could you?) or experiencing suffering on anything like the scale they caused others (again, how could they?) the world didn't use that to keep holding their feet to the fire. They did for a bit, then moved on.
The business with containing Soviet expansion seems like the heart of the matter. Morality and retribution (not the same thing, of course!) get put aside when it comes time to resist a powerful enemy. But really, morality isn't a factor in international relations, except when it comes to attempting to sway the opinions of populations. It's all about what you want to happen and what you can do to make that come about. After WWII, what the Western Allies wanted to happen was for West Germany to become strong again and serve to resist Soviet expansion. They made it happen by forgiving debts and helping Germany rebuild. The Greek crisis seems to have no such goals or methods. Instead, it's a bunch of "they should do this and that" because of some idea of morality. And that argument falls really flat when the country making that moral argument benefitted greatly from other countries doing things differently for them within living memory.
It's not really about Germany or WWII or morality or revenge or any of that. It's basically, stop wagging your fingers and talking about what you think should be done, and start figuring out what your goals are and how to achieve them.
The article compares the current situation in Greece to post-WW2 Germany, I'm explaining why it doesn't make any sense to make such a comparison. I'm not talking about who deserved what or whatever, morality, retribution or anything related to that.
Go talk about morality or retribution somewhere else.
"After WWII, what the Western Allies wanted to happen was for West Germany to become strong again and serve to resist Soviet expansion."
Wrong, they wanted to transform Germany into an under-developed agrarian state that would never pose a threat again. Read your history. It only changed due to the Soviet threat, but that was after years of the previous policy.
In the meantime, Greeks are worried that their fat retirement funds and unemployment insurance will be cut...
This is low. How does the last sentence relate to the rest of your comment? You present a dire situation for post-war Germany, which let me assure you is nothing compared to what Germans did in Greece (and Russia for that matter) during the war (like murdering kids), and then you close it with a comment for Greece which is quite irrelevant to the context. Or is that Greece which was devastated by German occupation more than any other country in WWII has to answer for what happened to Germany post-war. We didn’t even participate in any of that, we were busy killing each other in a civil war orchestrated by the Brits.
I’m sick and tired with the racism and hatred some people in here have towards Greece.
Yes, that comment was noxious and abusive, and we are going to ban accounts that do it repeatedly.
I'm sorry to add that you've also been making the threads worse by lashing out at other users. Please follow the HN guidelines and remain civil, even when others are being provocative.
There aren't very many HNers who can articulate the Greek perspective first-hand to the rest of us, so you have a special contribution to make to these threads. Of your compatriots who have been posting, the ones I've seen have done so with impressive dignity, and they've raised the whole discourse as a result. So clearly it's possible, because they surely have the same emotions that you do.
There’s no reason to ban anyone, well you can ban me if you like I won’t make a fuss about it. But this is the Internet, sometimes harsh words are exchanged. It doesn’t matter, we lack physical connection so we are hyper sensitive to how something is articulated. Other than that I seriously doubt the HN community will be hurt by half a dozen posts that might got derailed. We could all live happily ever after.
Personally I will stop commenting in any posts relating to Greece, or any other non-technical/geeky post for that matter, since obviously my temperament is going ballistic these last couple of weeks.
My sincere apologies if it seemed harsh, it wasn't my intention to offend anyone. I'd edit that comment if HN allowed me to.
But the entire discussion seems to keep falling back to "Germans suffered because they deserved". Whatever Germany did to Greece in the war does not change the fact that the situations in current Greece and post-WW2 Germany are not at all comparable.
I don't have any hatred towards Greece or Germany in this matter. But it makes no sense to say "look, Germans got part of their debts forgiven and now don't want the same for Greeks", when Germans were surviving on 1000 calories per day, and Greeks still enjoy full retirements and unemployment payouts.
You keep reproducing the same stereotypes many others hold in these recent discussions. Not everyone here enjoys a privileged life lad. A third of the population is under poverty standards. The unemployment payouts you mention is a mere 360 euro monthly payment which is increased by 10% for each family member. And that if you are lucky enough to have a declared job or a full time one. You can’t live in today’s Greece with that kind of money, mainly because prices for consumer goods are as high as in countries like Netherlands or Germany.
There's a whole geostrategic reasoning behind that. It was the start of the cold war, germany was supposed to be the buffer zone against the russian tank armada. In the region where I come from, all bridges have dedicated manholes to plant charges to bring them down, something my classmates still trained in the army. The mountains are riddled with nuke bunkers that had nuclear weapons aimed at German territory. French nukes had a maximum range that would have them smack down right in German territory. Having a struggling economy situated right at the iron curtain would have been a problem. Making enemies of the german population would have created issues.
There's other reasons a second debt relief for Greece is a hard sell. They basically asking for new funding of about 50 Bil EUR while at the same time asking for a haircut. They're also asking for funding from economies that are much worse of and went through similarly bad recessions[1]. So at the moment the general stance (not only in germany) is quid pro quo - do your reforms and we'll fund you. Then there's the argument that extending the payment deadlines is actually a debt relief in all but using the word. The debt gets devalued at the inflation rate.
[1] Edit: obviously I'm not talking about germany here, but the east european members of the EU.
> So at the moment the general stance (not only in germany) is quid pro quo - do your reforms and we'll fund you.
Which is insanity that will never work. You will just end up in an endless cycle of the Grecian economy worsening, the Grecian debt rising, and more pleas for debt relief, as has already been happening.
> They're also asking for funding from economies that are much worse of and went through similarly bad recessions[1].
These same destructive austerity policies have destroyed most economies in Europe. Look at the number of European economies that have not even reached their pre-2008 GDP due to these policies. Many are only beginning to recover now as austerity tapers off. In several the debt actually worsened because of falling GDP and rising unemployment.
Austerity policies have achieved nothing except for needlessly higher taxes, the rollback of parts of the welfare system at the expense of prolonged recessions and minimal (or no) debt reduction or debt increase.
And yet, people think more austerity is the solution for Greece? How can this be? How many times do troika GDP estimates have to be radically and totally wrong before people realize austerity is only destructive?
> Which is insanity that will never work. You will just end up in an endless cycle of the Grecian economy worsening, the Grecian debt rising, and more pleas for debt relief, as has already been happening.
So what will work? Do a haircut and then hand them more money? Will that work? Because that's what they're asking for. A third bailout is what's being asked for.
Yes, major debt forgiveness and enough money to stimulate the economy would work, and in the long-term, a real fiscal union in the EU that automatically handles these kinds of issues.
Monetary policy in the Eurozone that put inflation above the present 0.2% would be helpful.
A Grexit would work and is probably the only realistic option, because the above two things are not going to happen.
Some of these options would also be painful, but at least there would be an end in sight. There is no end in sight with the loan request -> austerity demands -> worsening economy -> loan request cycle. Almost anything Greece does will be better than continuing in the same self-destructive cycle.
> enough money to stimulate the economy would work,
That might indeed work. But who's supposed to foot the bill? Since greece does not have the money and greece is openly stating they can't even pay the current loans. And I don't see how debt-forgiveness is helping here. A default might help, but greece is running a marginal primary surplus at best, so even with a default they'd be stuck where they are - in a pretty shitty place.
The only thing I could see that would help is a fiscal union, but a fiscal union would require all parties to give up some part of their control and seriously, I don't see that happening (though I wish it would)
Two things, first we do not 'pick on Germany.' We acknowledge that Germany had the most murderous government in all of history. And no, Britain did never set a explicit policy of extermination and it did not construct factories of death. [1] And second, Greece was not only on the receiving end of loans, but also on the receiving end of a completely boneheaded 'rescue' policy.
[1] Yeah, these are technical terms. See Timothy Snyder, Bloodlands, 2010 for definitions.
Actually, a lot of the money that went to banks went to greek banks (some subsidaries of german and french ones, but still greek). The alternative would have been that those banks go bankrupt and the customers of those banks loose most of their deposits. Would that have been a better option?
> Did Greece just emerge from the largest military conflict on the planet utterly destroyed?
A conflict that was furthermore started by an illegitimate government (literal nazis). On top of that most of that debt was because of reparations for the previous largest military conflict. Reparations that arguably led to the nazis taking power in the first place.
I understand why people like comparing the situations, but they are really completely different.
EDIT: Someone downvoted me for this so I guess they're too lazy to read the article. In which case, I'll just copy paste the important parts.
They destroyed 25% of the country's forests; 56% of the roads; 50% to 90% of the bridges; 65% of automobiles; 60% of the trucks; 80% of the buses; 100% of the trains and railways; 80% of the factories; 100% of the water and sewage infrastructure.
...principal harbors were blown up. Installations, machinery and quays were destroyed." The Germans also blew up the strategic Corinth canal. In addition, the Germans sank 74 percent of the Greek ships and destroyed 100 percent of telephone communications.
"the occupying forces applied a systematic plan for the destruction of Hellenism: the burning of villages. 1,770 Greek villages lie in ashes. In certain parts of the country, particularly near the frontiers, destruction by fire reached the proportion of 90 % of the villages of every region."
The Germans and their allies killed or were responsible for the death of 13% of the Greek population.
You're conflating post war Greece and today's Greece. The article's author is comparing Greece _today_ with the post war Germany. It's completely incongruent.
> Also let's not forget Greece got ~160bn euros in debt relief just 3 years ago.
Let's also not forget that most of that debt did not exist a few years earlier. Yes, Greece had and has a massive tax evasion problem, and debt wasn't exactly low pre-crisis either. But most of the current debt is a result of bank bailouts:
I don't think that's an accurate view of things, the causal chain goes the other way. Banks had to be recapitalized because of the PSI, because the Greek default wiped them out. The bailouts were directly caused by the default. And in any case, they had no choice: without the Evil Bank Bailouts Greece would have been left literally without a banking system, that's not really an option.
Giving the government tens or hundreds of billions of euro more will not solve the situation and will likely make it worse. The government can't manage that kind of money in an efficient way given the current levels of tax fraud and other kinds of corruption in the country right now.
The EU would be much better off if it offered loans only to private individuals and (small) businesses, if it really wanted to help Greece. Taking a more "decentralized" approach would ensure the "waste" would be minimal from such loans.
Phillip Greenspun writes (accurately, I think): "Journalists keep referring to the years of “austerity” that Greece has endured. Government spending has been cut so much that it is now only 58.5 percent of GDP (heritage.org). What does a country that hasn’t suffered austerity spend? Singapore’s government clocks in at 14.4 percent (same source). How about a command-and-control centrally planned Communist dictatorship? China is at 25 percent. A socialist cradle-to-grave welfare state? Sweden is at 52 percent.
Are the Heritage data wrong? If not, how is it possible that Greece continues to be cited as an example of a country where the government doesn’t spend enough?"
Countries with much worse pensions than Greece are being asked to bail out much more lavish Greek pensions — it is both moral hazard and injustice. Let's keep everybody fed and work on the medical aspect, too, and figure out how to make the Eurozone fair, which could be a minimum pension / benefit level of the lowest country, adjusted for local prices to other countries, and if you want something above that you can't demand that poorer nations pay for it.
He probably means Slovenia, Estonia, Slovakia, Latvia and Malta. But that doesn't mean much, those are all countries with a much smaller economy than Greece's so it's natural that they pay smaller pensions.
Why is it natural they pay smaller pensions? It's smaller in terms of how much money each pensioner gets per month that he's talking about, not smaller as in "total amount of money spent".
Actually most of the money was loaned by the Eurozone - mainly Germany - as welfare for German corporates who benefited from Greek government spending on German exports. (Including essentials like submarines and other military equipment.)
The suggestion that some huge percentage is financing lazy pensioners is simply wrong - if only because those same pensioners paid money into the usual pension pot while they were working.
The issue is more that the lunatic imposition of austerity killed Greek economic output, making existing spending commitments unaffordable.
To your first point: It is pretty ludicrous to claim that giving money to the Greek government, who then gives it to Greek public sector sinecure holders, who then buy a Mercedes (for instance) is welfare for the German company. It is the Greek who end up with the goods.
To your second point: The pensioners did not pay into a pot. Greece doesn't have a _funded_ pension pot, they have an unfunded "generational contract" like most other countries public pension system - i.e. the current pensioners paid in small amounts for the smaller number of shorter-lived pensioners that drew benefits 30-40 years - and they themselves now draw pensions for longer and in larger numbers.
As such the "lunatic imposition of austerity" is only bringing the Greek pension age and institutional standards in line with the rest of the continent - which they failed to do for decades prior.
We don’t buy Mercedes only. We also buy German tanks and submarines and French military airplanes. Which we shouldn’t if Europe were to guarantee our borders as it’s their obligation.
When you drastically cut government spending in a depressed economy the GDP takes a nosedive. Greece's GDP dropped by a staggering 25%. That's the equivalent of a 4.25 trillion drop in GDP for the US. So the government spending that remains is large compared to the GDP that remains. But of course the cuts were still massive.
The percentage of GDP that's called "government" is pretty malleable. There's no real difference between a for-profit railroad monopoly that depends on government subsidies, and a nationalized railway system. But in one case the railroad is classified as private industry, in the other case as government spending. This applies throughout the economy. For instance, the work US military contractors do would be considered government work in Europe. So you can't simply compare the government-to-GDP ratios between countries.
When it comes to austerity the issue is the change in government spending, not the size of the government. The sudden change is what shocks the economy. Government spending in Greece went down by a lot, services got cut, salaries got cut, pensions got cut. The name for this kind of policy is austerity.
So you shouldn't take anybody seriously who puts austerity in Greece in scare quotes.
> Journalists keep referring to the years of “austerity” that Greece has endured. Government spending has been cut so much that it is now only 58.5 percent of GDP (heritage.org).
It seems a little misleading to say this. Greece's GDP has tanked since 2008, why would you expect spending/GDP to fall even if they made cuts? Worse, in countries with any kind of safety nets, plummeting GDP (and thus rising unemployment) means more people will take advantage of expensive government social services.
There is simply no way to cut your way out of debt in a deep recession when you already have high debt.
It is impossible for the Grecian government to do anything about growing their economy when their creditors are demanding spending cuts and tax hikes that actually worsen the economy.
The troika has been pushing "expansionary austerity" and it has been a monumental failure that has dragged down Europe. Would the Grecian government be able to provide pro-expansionary policies without being hamstrung by the troika? I don't know. But it seems like a moot point.
Not just that, but they've also been running huge deficits every year. That's what the loans from the Troika have been funding, after all. The deficit has been >10% of GDP every year since 2009, except 2013 when it was "just" 8.5%.
Percentage of GDP is misleading because the economy is a Great Depression scale crash, no business, no jobs, and high reliance of the population on the government simply because there is no other source of money. When the economy tanks, strain on the safety net increases, this should be obvious.
The % of GDP is irrelevant. A dollar spent by Singapore's private-but-not-really-private SBS on a maintaining a metro line is intrinsically no different to a dollar spent by Greece on its metro line. Both employ people. Both are productive investments.
Austerity is about shrinking public sector spending. If it's done during a period when the private sector is also shrinking its spending, the effect on employment and growth can be cataclysmic.
The Heritage data isn't wrong. The Heritage just picked the wrong data to make an intentionally misleading point.
Singapore is the world’s best place to do business. As for China, big parts of the country are underdeveloped. How about we compare similar things? Austria 50%, Belgium 53%, Denmark 58%, Finland 55%, France 56%, Italy 50%, US 42%, Germany 45%.
To further emulate the German success, don't forget that you'd have to force severe indoctrination of the next several generations from school age up by requiring certain horrific historical retellings, and force similar thought policing by making certain forms of political support, speech, and activity, however peaceful, utterly illegal.
>But the Greek economy has shrunk by a quarter. Its pensioners have been impoverished. Its banks are closed. That counts as suffering consequences. No sane government would emulate the Greek path.
>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.
So ........
I detect a contradiction between those two claims, that appears to go unaddressed in the article. Which is it? Does Greece have what to gain by improving things or not?
With all the US government pressure in this topic, and Syriza styled after Venezuela populists, I wonder why the US is not giving money to Venezuela but the EU should pay left populists.
German debt relief came with the creditors rewriting the entire constitution. I think if Greece is willing to go for that, they can probably get themselves a deal!
As a German myself, I must admit that this is the case.
The current attitude of Mrs. Merkel is popular in Germany and also other EU countries are mad about Greece, because they improved their finances with much effort and did not get that much care as Greece did.
And yes, it is right, that Greece carries a lot of fault in this problem, since they forged their financial data. And I even think, that it was a big mistake, to take Greece into the Euro, because the country was and is not ready for it.
But, I fear, that now dropping Greece, after five years of endurance -- and Greece took really a heavy load (eg. many pensions where cut 45% or more) -- will revert, what people thought, the Euro will bring: To unite Europe and prevent further wars.
The financial crisis already has brought many new bad feelings between countries. When kicking out Greece now, because we insist in our own financial thinking (Greece has to privatize that, do that, do that, cut spending, cut, cut ... cut), we risk that next maybe Italy or Spain could fall and more and more bad feelings between countries. And we risk to loose the Euro in the long run.
We should focus on a solution now, that last for a longer time and does not bring new problems in the future (as was done five years ago --- everybody knew, that the load was to much for Greece to carry, but nobody dared to look for a long-time solution).
Of course, a new haircut (as everybody knows, will be necessary now) will cost more money -- but without a haircut, Greece will leave the Euro and all the money that was guaranteed from other EU countries will be lost. So even the short-time cost will be much higher -- the cost of bitter feelings and financial dogma. For Merkel it can also be the cost of votes (because she always looks for the voters -- but in this case, stupid looking for votes can be horrific for Europe as whole!)
The long term costs can be even higher: Loose what was thought to be won by the European idea and it even can be, that we loose the Euro in the long run.
I fear, by thinking, we must kick out Greece now, to limit the costs, we even have higher costs in the long run. We add another error on a long run of errors made in the Euro case.
If you look at the Greek situation from an American lens you will mistakenly consider debt forgiveness to be a solution to the Greek problem. There are two big issues with the Greek situation that go beyond the debt forgiveness issue
1. Even if substantial portion of the debt is forgiven, the Greek state runs a deficit with a corrupt clientalistic system built since 1980 that provides Denmark type social benefits with baltic-area economy. Unless this social structure is completely reworked in line with the fundamentals of the Greek economy, there will always be a mismatch and Greek will continue to need bailouts. BTW, this is Europe wide problem where old people voted massive benefits for themselves in the past thirty years and adjustment is needed. Greece happens to be the most extreme case of mismatch. As Angela Merkel says, Europe has 7% of the world population, 25% of the economy and 55% of the social programs. In contrast, the US is only 20% of social spending (if you don't include military). So the US lens is always towards more social spending.
2. Moral Hazard across the Eurozone, debt forgiveness for Syriza will embolden other left wing parties in Spain (Podemos) and Italy to make noise and 'democratically' choose to default on substantial portion of their debts. Spain and Italy are much larger economies with much larger debts, if they decide to default it will lead to massive problems in the Euro area. The German solution is to make the Greek situation so utterly painful (via Grexit if needed) that much bigger problems with Spain and Italy don't come down the line.
Please explain why public spending for public benefit counts as "moral hazard", while public spending on bank bailouts, corporate welfare, and the opportunity costs of chimerical QE lending is a moral necessity?
Or why the IMF is perfectly happy to lend money it will never recover to the bankrupt Ukraine, but considers Greece to be beyond the pale?
Or why Germany - which has actually had more debt forgiven than any other country in Europe - has somehow managed to persuade everyone that it's a unique model of fiscal probity?
Ukraine doesn't have a social system that approximates Northern Europe level percentage and they collect taxes.
The debt that Germany owed was imposed by the Victors of WWI and WWII, it wasn't that Germany bankrupted itself into ruin by spending more and not collecting taxes. Pretty hilarious to see people compare Greek situation to Germany after world wars.
Are you for real? When a war ravages your country and destroys your cities you can't send the bill for the reconstruction to the aggressor? THAT is somehow immoral or illegitimate debt that deserves to be forgiven?
1. Greece needs reform, this not disputed. However, corruption and the size of their welfare system are not the cause of this crisis. The conservative parties in Europe want to dismantle the welfare system and they're simply exploiting the crisis for this purpose.
2. The banks got a huge bailout as a reward for crashing the economy. How's that for a moral hazard? But when it comes to funding for schools, hospitals, and the rest of the population who got stuck in this depression through no fault of their own a bailout is suddenly a moral hazard? Your view is morally abhorrent.
1. The welfare system is unsustainable, given European demographics and economic situation. So, adjustment is necessary. Having a balanced social system in line with what your economic situation is doesn't mean dismantling everything.
2. Somehow people think Banks are this magical entity that creates money out of nowhere. Or that some hedge fund money is in the bank. The money that Banks have are deposits of other common people!. So if you don't pay the banks then some common person on the other side loses money. Yes, money that could have been used for schools, hospitals etc. So when Greek people borrowed money, spent it all and now don't want to pay it we are supposed to feel sorry for them. But, the German/French pensioner who has already lost money during prior debt relief in 2010 and 2012, we shouldn't feel sorry for them. Something about Nazis and WWII etc. etc. Strange ideas.
1. The welfare system in Europe is entirely sustainable in the long term. It's just a matter of national priorities. Conservatives consistently attack the social safety net: in their view the government is always "too big", taxes "too high", and the welfare system "too expensive". A welfare system can also be large and balanced. Just raise the taxes necessary to pay for it.
2. Greece CANNOT pay the money back, because they don't have it. The question that remains is whether we punish the Greek people for something they had no say in and did not benefit from. I say punishment here is counterproductive and immoral.
When banks or institutional investors make dumb investments they have to lose their money. The responsibility for due diligence lies primarily with the lender. The amount of interest they charge is compensation for the riskiness of the loan. The banks decided to lend money to Greece and Germany at the same interest rate. That's plain insanity. You can't expect financial mastery from regular people, but you can --and should-- demand it from billion dollar pension funds.
The roots of Greece's current problems lie in the failure of the EU to enforce its own rules. They overlooked the fact that the Greek government of the day cooked its books to meet the Maastricht criteria for joining the Euro, then failed to enforce the Stability and Growth Pact rules when France and Germany broke them.
Eurozone interest rates were set at a low level to stimulate the post-reunification German economy, ignoring the risk of over-stimulating (and inflating asset bubbles) in the faster-growing Portugese, Irish, Greek and Spanish (PIGS) economies.
The end result is that the German economy benefited, at the expense of the PIGS economies, which wound up tatters. Even today, the rule-breaking continues; Germany's current account surplus is in breach of the 6% limit defined in the EU's Macroeconomic Imbalance Procedure but the EU turns a blind eye.
But even if you decide to ignore how the current situation arose and whose fault it is, the simple fact is that Greece cannot repay the amount of debt it is now lumbered with. Even the IMF has sais that it's "unsustainable". The Greek economy has suffered far worse than any other country in Europe: https://pbs.twimg.com/media/CJYl1rTXAAAQvju.png
The EU is partly responsible for that, and it is morally wrong, in my opinion, for them to refuse to face up to the fact that the only acceptable solution is to reduce the amount of debt that Greece has to repay (and/or extend its maturity to achieve the same result).
EDIT: By the way, it's not like the Greeks have done nothing. They were on course to generate a primary budget surplus this year (i.e. before you take interest payments into account).
Those of you in this and related threads who have been abusing each other and each other's countries are behaving shamefully. There is no place for that on Hacker News. If you can't comment respectfully—which means sincerely taking extra care to be respectful, given how sensitive this topic is—then please don't comment here at all.
Would everyone else please do the community a favor and flag such comments? You can do that (if your account has 30 or more karma) by clicking on a comment's timestamp to go to its page, then clicking 'flag' at the top.
If that proves insufficient, and HN really is incapable of discussing this without devolving into nastiness and slurs, then we're simply going to start killing these stories when they come up, despite the importance and intellectual interest of the topic.
I agree with this, I'd also like to add that discussions to the extent that Germany was or was not "destroyed" in WW2 and therefore did or did not "deserve" debt relief are horrifying.
These threads seem to be a hotbed for people articulating their already formed opinions and cannot be read by anyone trying to establish what the facts actually are, which renders them useless to hn.
124 comments
[ 4.6 ms ] story [ 177 ms ] threadIt's a structural Greek problem, not a German one.
If you were Greek (Especially a young Greek) and had no prospects for a future and no hope for job in a country with highest unemployment (especially among the youngest) in EU, the black economy might be very attractive...
Also I am sure the "I did not cause this debt hence why should I pay taxes for it" attitude might be very prevailent
And do you blame them? You might feel all fine and mighty sitting in your chair reading HN (probably while at work) towards those "lazy" Greeks, but all you have to do is imagine yourself in the same situation.
The Greek economy already has contracted more and for longer than the US during the Great Depression (which did not have a larger debt burden then), let that fact focus your mind, here is a graph
http://i.imgur.com/LKQ6Mov.jpg
Don't forget that the Great Depression years where the golden age for criminals in the US, like I said its symptom of the problem not the root cause.
8| What sort of weird alternate universe can this sort of statement come from? Are you claiming tax dodging would go away if there wasn't austerity? So, 8 years ago there was no tax evasion in Greece, or at least no more than average?
While I do not condone it, it is plainly obvious that the average person in Greece will have no "ethical" issues dodging taxes especially seeing that unemployment is high (hence black/gray economy might be the ONLY choice) and many people especially the younger generation did not rack up this debt and are the ones suffering the most, might rightly be asking themselves why they should be the ones suffering and paying for it via taxes.
This won't blow over easily.
In fact this is the reason why its so difficult to turn around things in such countries. The issue is not technology or government policy. When you have a whole generation of people grow up in such a ecosystem, these practices seep into your culture and everyday life. You can only undo them gradually overtime, and sometimes it takes 2-3 generations to get out of it.
Another defining characteristic of a society where cash transactions are common - Every day corruption is omnipresent.
If that's so... and I generally agree it is... then why do people keep lending them money? Or perhaps rather, "lending" them money?
I actually find that a rich and interesting question not amenable to snap answers. But it doesn't make anybody involved look very good or ethical. Call it old fashioned of me, but neither borrowing money that you basically know you can't be paid back, nor lending money you basically know can't pay back, is very ethical. (Perhaps that's why the discussions about who's at "fault" keeps going around so viciously... the answer isn't "A XOR B", the answer is the union of everybody involved.)
Most of the money that's being lent is for repaying existing debts that come due. Like any bankruptcy (which is what this is, formally declared or not), the ECB is trying to smooth out the process and ensure creditors are treated equitably. As for "keeping lending them money", the bailout loans are tied to political reforms intended to fix the problems. How else would you do it?
If you're asking why creditors lent them money in the first place, a lot of that predates the financial crisis. A lot of it was before rampant fraud in Greek governmental accounting became apparent. And perhaps people had more faith in European integration and expected Germany to pay Greece's debts if they ever get into trouble.
Me personally? Try a lot harder to not get into that problem in the first place.
I don't mean that sarcastically or as a snap answer exactly. My views on debt are right now somewhat old fashioned, and they're getting older-fashioned pretty quickly, directly in response to current events. Humans have a long experience with debt, a lot of that experience has boiled down to "treat it as radioactive waste", and I'm increasingly unconvinced that all of our fancy financial tools have actually removed the underlying reasons for that millenia-old assessment, rather than pushing those reasons around with ever-more sophisticated tools into ever-more complicated cognitive blind spots, until one day it blows up even worse than it used to be able to.
A sober analysis of a lot of the debt in the world right now is that it simply isn't going to be repaid, for mathematical reasons, and that's been true for quite a while now. (The crisis merely revealed what should already have been obvious, and it is obvious that many people still don't think this is true even after that.) And a lot of that debt has been moved behind things like "guaranteed pensions" and other things that are amenable to various forms of jiggery-pokery on the accounting.
So, that's great and all, but what do we do now, right? Because no amount of wishing for changes in the past will cause them to manifest. To which my answer is basically sunk-cost fallacy, stop throwing good money after the bad. Political restructurings don't appear to be working, so stop that. But then, I'm an engineer, not a politician... "stop doing things that don't work" is very easy for me but might as well be a concept from the planet Vulcan for a politician, who is so full of nuance that they can talk themselves right out of reality and consider it not merely moral, but noble.
It seems to me to be the opposite - most of the crises are caused not by the algorithmic side but by the human side. E.g. LCTM's positions famously were profitable - eventually, if humans hadn't panicked and forced them to sell off. More recently, a lot of the subprime CDSes never actually paid out - it's just that people worried, and lowered the value of them. As was said of a recent DeutscheBank lawsuit, "Lehman would still be in business if they hadn't had to mark their positions to market".
> So, that's great and all, but what do we do now, right? Because no amount of wishing for changes in the past will cause them to manifest. To which my answer is basically sunk-cost fallacy, stop throwing good money after the bad. Political restructurings don't appear to be working, so stop that. But then, I'm an engineer, not a politician... "stop doing things that don't work" is very easy for me but might as well be a concept from the planet Vulcan for a politician, who is so full of nuance that they can talk themselves right out of reality and consider it not merely moral, but noble.
So you're saying a lot of self-righteous words there, but what are you concretely proposing? Just cut Greece off, revoke their authority to print Euros, and leave them to fend for themselves with their creditors? That is certainly an option, but it's not without costs to say the least. Arguably even if that ends up happening, by muddling through for a bit first we've made things better than they would have been. You can only say the things we've been doing "don't work" if you're confident things wouldn't have been worse without them. The current approach is certainly undignified, but fundamentally I wouldn't say it doesn't work.
I believe I was pretty clear that none of the options are good right now.
And while that doesn't solve the problem we face now by any means, we must also not fall into the trap of being so focused on the near-term that we forget to learn from what happened, which I think is where we are now. It is probably rational for a lot more governments to start getting a lot more nervous about debt load, but instead we've all but talked ourselves into the belief that debt-fueled government spending is a moral necessity, and anyone who disagrees is an idiot. I hope that's right, even as I fear it's not (it's very ahistorical, if nothing else), because it's certainly the path we're committed to now.
"The current approach is certainly undignified, but fundamentally I wouldn't say it doesn't work."
It hasn't worked yet. It has perhaps not "failed" yet, but it certainly hasn't "worked". I recognize this is not a contradiction of what you said, but the same sort of idea through a different linguistic lens.
I consider this as part of the larger picture. We're still in the 2008 crisis, still marching along, still using the same techniques to resolve it. In that sense, this has failed; we're still in 2008, we have no immediate prospect of escaping from it, and our current plan is to continue doing the same things. I feel I'm justified in questioning why our "solutions" are doing so poorly.
I truly hope that you get to continue saying that this hasn't failed for a lot longer, but I fear that we are still in a situation where 2008 was still only the opening salvo, that the "solution" to 2008 was whackloads more debt for everybody, and that the next time the world economy burps it's going to go much worse because that option will have been played out. If this isn't failure, it sure isn't success.
If Greece had collapsed in 2010, the rest of Europe would have been hurt somewhat badly. By buying five years, the rest of Europe was able to position themselves so that a Greek collapse would not hurt them nearly so badly.
It is my impression that Greece did not use those five years nearly so wisely, but that's a different issue.
Let's look at it this way. What if they take that seriously and stop lending them money now?
Please note the amount of diplomatic and geo-political pressure being put on other european countries/creditors currently to bail them out and give them more funds. So this is damned if you do, and damned if you don't kind of a situation.
If what you said is taken seriously, Greece will not get a single penny now either in bail out money or other recovery loans.
The dysfunctional tax system in Greece isn't the cause of the crisis. But people keep bringing it up because once the people of Greece can be depicted as corrupt and lazy we can morally justify any amount of hardship we force on them.
The problem with Greece is entirely structural. But the fundamental problem is that Greece doesn't have an economy that's strong enough to compete with northern Europe without substantial subsidies. Everything else is minor in comparison.
You can give all the money to such people and they will only want more, it will fix nothing because they think they are 'entitled' to the free money. They will do no real work because they never have, and it will too painful to get off their high horse and realize they are subject to same standards as every one else in the world.
And it's not as if their debt hasn't been restructured.
No, but neither did Germany. In fact, despite bombings etc. the industrial infrastructure post-war was bigger than 1933 (because it was heavily built out during that period).
edit: Here is a source from German public television (skip to 4:20): https://www.planet-schule.de/sf/php/sendungen.php?sendung=91...
And beside the infrastructure destruction there were the ravages of war, disease, psychological, nutrition, etc.
Not to mention the obvious generation of men who died. A whole generation of men dead from warring.
No, it really wasn't :)
Heres a documentary from German public television. The interesting part starts at 4:20. I hope you can hear the English language, it has been dubbed in German:
https://www.planet-schule.de/sf/php/sendungen.php?sendung=91...
The national socialists came to power as a consequence of the severe deflation in the 1930s, not the hyperinflation 10 years earlier.
After all, they did the same thing to Japan too, which didn't have a treaty of Versailles.
Every country that has been a world power is pretty much guilty of this. Why aren't we picking on the English for the old empire or the thousands of wars and skirmishes on the continent between these powers? Or on the crusades? Picking on Germany is stupid and more Yanis Varoufakis-like hysterics. His over-the-top rhetoric and calling his own lenders "terrorists" is what's wrong with the world, not what's right.
Apparently, Greeks are willing to say or do anything except actually collect taxes and cut public spending. Thus far, Greece has been on the receiving end of historically generous loans.
Why did Germany deserve better terms after their adventures? Or if it's not a matter of deserving them but just a purely pragmatic question of those terms being useful to avoid a future catastrophe, why doesn't that pragmatism apply here?
It was even more "pragmatic" than that; it wasn't about preventing German civilians from starving or anything so humanitarian, it was the US wanting to stop the spread of communism. There's no similar "threat" in Greece today. Maybe if IS starts getting recruits near Greece the calculus will change.
Allowing Russia to trivially attack their borders and put up a Mediterranean blockade is unacceptable to the EU/NATO, but Tsipras is probably crazy enough to make this happen unless he gets the terms he demands. That said, the firing of Yanis Varoufakis probably means Tsipras is serious about cutting down the stupid Greek extremism that has made these talks impossible and probably wants to stay in the EU/Eurozone/NATO and will play ball on some level. I guess we will see.
Can you supply some documentation for this claim?
Millions are still officially listed as missing, mostly sent to slave labor camps in Siberia.
http://www.stern.de/politik/geschichte/kriegsgefangene-viele...
Also, civilian Germans in the territories occupied after the war were also put to forced work.
There's plenty of data on: https://en.wikipedia.org/wiki/Forced_labor_of_Germans_after_...
Also, international humanitarian aid to Germany was initially forbidden. There were mass rapes (some estimates put victims at 2 million German woman) and massive famine (people going through winters with 1000-1500 calories per day).
The general idea after WW2 was to completely obliterate Germany, so it would never rise again. The change in mindset only came when Western countries realized that a strong Germany was the only effective defense agains Soviet expansion.
In the meantime, Greeks are worried that their fat retirement funds and unemployment insurance will be cut...
This makes no sense. The atrocities you list were almost all done by the Soviets, yet you somehow blame the West? The West invested into West Germany from the beginning (Im not arguing this, it takes time to ramp up rebuilding and yes there was a real lag period of post-war crazyiness, fatigue, and lack of money. We had our own dead to bury and our own economies to fix up first) and tried to build Berlin as a model Western city. Yeah, the Soviets did fuck all, but the western side was a totally different story.
Also, there's nothing wrong with forcing soldiers to rebuild what they broke. Oh you guys thought you could drop bombs and mortars endlessly and just go back home? This story should be a message to the young people clamoring for war today. If you lose, its not all hugs and sunshine. Its years of back-breaking work to undo the damage you have done.
West didn't "invested into West Germany from the begininng". Seriously, read the links I posted.
"Also, there's nothing wrong with forcing soldiers to rebuild what they broke."
Geneva conventions?
I'm not defending German actions or anything. I'm just showing that there's absolutely no way to compare Greece and post-WW2 Germany.
These only apply during wartime.
Were they? During the siege of Stalingrad, Nazis were hanging dead bodies of kids [1] in the streets to demoralize the soviet troops. Of course it worked the other way, Soviets were so much infuriated by this that they fought to the last man.
You have some audacity coming here and making such claims.
http://www.dailymail.co.uk/news/article-2228373/Human-excrem...
Yeah, the Germans suffered a lot after the war. But what do you expect to happen after the unbelievable suffering they inflicted on so many? The conditions you describe are pretty minor compared to what they put others through beforehand.
Now, that's not to say they deserved to suffer. Many, perhaps most, of those people were still innocent. But of course the same goes for the Greeks. Very few Greeks actually caused this debt crisis themselves, while many of them are now suffering for it.
Germans were forced into slave labor? They did it to others first, and worse. Germans starved? They starved others first, and worse. And yet despite never coming anywhere close to repaying the damage (how could you?) or experiencing suffering on anything like the scale they caused others (again, how could they?) the world didn't use that to keep holding their feet to the fire. They did for a bit, then moved on.
The business with containing Soviet expansion seems like the heart of the matter. Morality and retribution (not the same thing, of course!) get put aside when it comes time to resist a powerful enemy. But really, morality isn't a factor in international relations, except when it comes to attempting to sway the opinions of populations. It's all about what you want to happen and what you can do to make that come about. After WWII, what the Western Allies wanted to happen was for West Germany to become strong again and serve to resist Soviet expansion. They made it happen by forgiving debts and helping Germany rebuild. The Greek crisis seems to have no such goals or methods. Instead, it's a bunch of "they should do this and that" because of some idea of morality. And that argument falls really flat when the country making that moral argument benefitted greatly from other countries doing things differently for them within living memory.
It's not really about Germany or WWII or morality or revenge or any of that. It's basically, stop wagging your fingers and talking about what you think should be done, and start figuring out what your goals are and how to achieve them.
The article compares the current situation in Greece to post-WW2 Germany, I'm explaining why it doesn't make any sense to make such a comparison. I'm not talking about who deserved what or whatever, morality, retribution or anything related to that.
Go talk about morality or retribution somewhere else.
"After WWII, what the Western Allies wanted to happen was for West Germany to become strong again and serve to resist Soviet expansion."
Wrong, they wanted to transform Germany into an under-developed agrarian state that would never pose a threat again. Read your history. It only changed due to the Soviet threat, but that was after years of the previous policy.
https://news.ycombinator.com/newsguidelines.html.
That means posting civilly and substantively, or not at all.
This is low. How does the last sentence relate to the rest of your comment? You present a dire situation for post-war Germany, which let me assure you is nothing compared to what Germans did in Greece (and Russia for that matter) during the war (like murdering kids), and then you close it with a comment for Greece which is quite irrelevant to the context. Or is that Greece which was devastated by German occupation more than any other country in WWII has to answer for what happened to Germany post-war. We didn’t even participate in any of that, we were busy killing each other in a civil war orchestrated by the Brits.
I’m sick and tired with the racism and hatred some people in here have towards Greece.
I'm sorry to add that you've also been making the threads worse by lashing out at other users. Please follow the HN guidelines and remain civil, even when others are being provocative.
https://news.ycombinator.com/newsguidelines.html
There aren't very many HNers who can articulate the Greek perspective first-hand to the rest of us, so you have a special contribution to make to these threads. Of your compatriots who have been posting, the ones I've seen have done so with impressive dignity, and they've raised the whole discourse as a result. So clearly it's possible, because they surely have the same emotions that you do.
Personally I will stop commenting in any posts relating to Greece, or any other non-technical/geeky post for that matter, since obviously my temperament is going ballistic these last couple of weeks.
But the entire discussion seems to keep falling back to "Germans suffered because they deserved". Whatever Germany did to Greece in the war does not change the fact that the situations in current Greece and post-WW2 Germany are not at all comparable.
I don't have any hatred towards Greece or Germany in this matter. But it makes no sense to say "look, Germans got part of their debts forgiven and now don't want the same for Greeks", when Germans were surviving on 1000 calories per day, and Greeks still enjoy full retirements and unemployment payouts.
I never said so. But comparing 1/3 under the poverty line vs. living on average on 1000 calories a day makes no sense. I'm not saying:
(1) Conditions in Greece aren't difficult (2) Greeks deserve what's happening
I'm saying:
(1) The two situations, Greece now vs post-WW2 Germany, are not comparable
Hopefully, despite today's harsh agreement, Greece will recover and be part of a strong Europe.
There's other reasons a second debt relief for Greece is a hard sell. They basically asking for new funding of about 50 Bil EUR while at the same time asking for a haircut. They're also asking for funding from economies that are much worse of and went through similarly bad recessions[1]. So at the moment the general stance (not only in germany) is quid pro quo - do your reforms and we'll fund you. Then there's the argument that extending the payment deadlines is actually a debt relief in all but using the word. The debt gets devalued at the inflation rate.
[1] Edit: obviously I'm not talking about germany here, but the east european members of the EU.
Which is insanity that will never work. You will just end up in an endless cycle of the Grecian economy worsening, the Grecian debt rising, and more pleas for debt relief, as has already been happening.
> They're also asking for funding from economies that are much worse of and went through similarly bad recessions[1].
These same destructive austerity policies have destroyed most economies in Europe. Look at the number of European economies that have not even reached their pre-2008 GDP due to these policies. Many are only beginning to recover now as austerity tapers off. In several the debt actually worsened because of falling GDP and rising unemployment.
Austerity policies have achieved nothing except for needlessly higher taxes, the rollback of parts of the welfare system at the expense of prolonged recessions and minimal (or no) debt reduction or debt increase.
And yet, people think more austerity is the solution for Greece? How can this be? How many times do troika GDP estimates have to be radically and totally wrong before people realize austerity is only destructive?
So what will work? Do a haircut and then hand them more money? Will that work? Because that's what they're asking for. A third bailout is what's being asked for.
Monetary policy in the Eurozone that put inflation above the present 0.2% would be helpful.
A Grexit would work and is probably the only realistic option, because the above two things are not going to happen.
Some of these options would also be painful, but at least there would be an end in sight. There is no end in sight with the loan request -> austerity demands -> worsening economy -> loan request cycle. Almost anything Greece does will be better than continuing in the same self-destructive cycle.
That might indeed work. But who's supposed to foot the bill? Since greece does not have the money and greece is openly stating they can't even pay the current loans. And I don't see how debt-forgiveness is helping here. A default might help, but greece is running a marginal primary surplus at best, so even with a default they'd be stuck where they are - in a pretty shitty place.
The only thing I could see that would help is a fiscal union, but a fiscal union would require all parties to give up some part of their control and seriously, I don't see that happening (though I wish it would)
[1] Yeah, these are technical terms. See Timothy Snyder, Bloodlands, 2010 for definitions.
It was about learning from history.
You cannot compare this to the disastrous economic mismanagement by successive Greek govs.
A conflict that was furthermore started by an illegitimate government (literal nazis). On top of that most of that debt was because of reparations for the previous largest military conflict. Reparations that arguably led to the nazis taking power in the first place.
I understand why people like comparing the situations, but they are really completely different.
Yes, we did. And utterly doesn't even give it justice: http://www.truth-out.org/speakout/item/24456-the-math-of-mas...
EDIT: Someone downvoted me for this so I guess they're too lazy to read the article. In which case, I'll just copy paste the important parts.
They destroyed 25% of the country's forests; 56% of the roads; 50% to 90% of the bridges; 65% of automobiles; 60% of the trucks; 80% of the buses; 100% of the trains and railways; 80% of the factories; 100% of the water and sewage infrastructure.
...principal harbors were blown up. Installations, machinery and quays were destroyed." The Germans also blew up the strategic Corinth canal. In addition, the Germans sank 74 percent of the Greek ships and destroyed 100 percent of telephone communications.
"the occupying forces applied a systematic plan for the destruction of Hellenism: the burning of villages. 1,770 Greek villages lie in ashes. In certain parts of the country, particularly near the frontiers, destruction by fire reached the proportion of 90 % of the villages of every region."
The Germans and their allies killed or were responsible for the death of 13% of the Greek population.
Also let's not forget Greece got ~160bn euros in debt relief just 3 years ago.
Let's also not forget that most of that debt did not exist a few years earlier. Yes, Greece had and has a massive tax evasion problem, and debt wasn't exactly low pre-crisis either. But most of the current debt is a result of bank bailouts:
https://en.wikipedia.org/wiki/Greek_government-debt_crisis#/...
The EU would be much better off if it offered loans only to private individuals and (small) businesses, if it really wanted to help Greece. Taking a more "decentralized" approach would ensure the "waste" would be minimal from such loans.
Are the Heritage data wrong? If not, how is it possible that Greece continues to be cited as an example of a country where the government doesn’t spend enough?"
http://blogs.law.harvard.edu/philg/2015/07/08/greek-austerit...
Unfortunately GDP went from 230 billion euros to 180 billion euros in the the same time period.
Which countries are those? How much are they being asked to pay?
The suggestion that some huge percentage is financing lazy pensioners is simply wrong - if only because those same pensioners paid money into the usual pension pot while they were working.
The issue is more that the lunatic imposition of austerity killed Greek economic output, making existing spending commitments unaffordable.
To your second point: The pensioners did not pay into a pot. Greece doesn't have a _funded_ pension pot, they have an unfunded "generational contract" like most other countries public pension system - i.e. the current pensioners paid in small amounts for the smaller number of shorter-lived pensioners that drew benefits 30-40 years - and they themselves now draw pensions for longer and in larger numbers.
As such the "lunatic imposition of austerity" is only bringing the Greek pension age and institutional standards in line with the rest of the continent - which they failed to do for decades prior.
The percentage of GDP that's called "government" is pretty malleable. There's no real difference between a for-profit railroad monopoly that depends on government subsidies, and a nationalized railway system. But in one case the railroad is classified as private industry, in the other case as government spending. This applies throughout the economy. For instance, the work US military contractors do would be considered government work in Europe. So you can't simply compare the government-to-GDP ratios between countries.
When it comes to austerity the issue is the change in government spending, not the size of the government. The sudden change is what shocks the economy. Government spending in Greece went down by a lot, services got cut, salaries got cut, pensions got cut. The name for this kind of policy is austerity.
So you shouldn't take anybody seriously who puts austerity in Greece in scare quotes.
It seems a little misleading to say this. Greece's GDP has tanked since 2008, why would you expect spending/GDP to fall even if they made cuts? Worse, in countries with any kind of safety nets, plummeting GDP (and thus rising unemployment) means more people will take advantage of expensive government social services.
There is simply no way to cut your way out of debt in a deep recession when you already have high debt.
See also Krugman's posts here: http://krugman.blogs.nytimes.com/2015/07/07/debt-deflation-i...
http://krugman.blogs.nytimes.com/2015/07/07/milton-friedman-...
The troika has been pushing "expansionary austerity" and it has been a monumental failure that has dragged down Europe. Would the Grecian government be able to provide pro-expansionary policies without being hamstrung by the troika? I don't know. But it seems like a moot point.
What should the Greek government do to "start growing their economy", that they've been unwilling to do so far?
eg. instead of paying people to go on welfare, they could instead pay them to build a bridge, office tower, housing, etc.
Austerity is about shrinking public sector spending. If it's done during a period when the private sector is also shrinking its spending, the effect on employment and growth can be cataclysmic.
The Heritage data isn't wrong. The Heritage just picked the wrong data to make an intentionally misleading point.
And no, Greece's spending isn't at 58,5%, it's 51,9%. Source: https://en.wikipedia.org/wiki/Government_spending
And that without taking under consideration that Greece’s GPD has been reduced by 25% in the last six years.
So yet another time in the last couple of weeks someone is trying to make a negative point about Greece by distorting the truth.
Why in the world would you cite Wikipedia without any attempt at source verification? Wikipedia's source for that table is http://www.heritage.org/index/explore?view=by-variables which clearly lists Greece at 58.5.
https://news.ycombinator.com/item?id=9850147
Seriously, if anybody got the money to do this.. it really helped Germany.
>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.
So ........
I detect a contradiction between those two claims, that appears to go unaddressed in the article. Which is it? Does Greece have what to gain by improving things or not?
They realize that the policies foisted upon them are self destructive. That's why they're rebelling.
The current attitude of Mrs. Merkel is popular in Germany and also other EU countries are mad about Greece, because they improved their finances with much effort and did not get that much care as Greece did.
And yes, it is right, that Greece carries a lot of fault in this problem, since they forged their financial data. And I even think, that it was a big mistake, to take Greece into the Euro, because the country was and is not ready for it.
But, I fear, that now dropping Greece, after five years of endurance -- and Greece took really a heavy load (eg. many pensions where cut 45% or more) -- will revert, what people thought, the Euro will bring: To unite Europe and prevent further wars.
The financial crisis already has brought many new bad feelings between countries. When kicking out Greece now, because we insist in our own financial thinking (Greece has to privatize that, do that, do that, cut spending, cut, cut ... cut), we risk that next maybe Italy or Spain could fall and more and more bad feelings between countries. And we risk to loose the Euro in the long run.
We should focus on a solution now, that last for a longer time and does not bring new problems in the future (as was done five years ago --- everybody knew, that the load was to much for Greece to carry, but nobody dared to look for a long-time solution).
Of course, a new haircut (as everybody knows, will be necessary now) will cost more money -- but without a haircut, Greece will leave the Euro and all the money that was guaranteed from other EU countries will be lost. So even the short-time cost will be much higher -- the cost of bitter feelings and financial dogma. For Merkel it can also be the cost of votes (because she always looks for the voters -- but in this case, stupid looking for votes can be horrific for Europe as whole!)
The long term costs can be even higher: Loose what was thought to be won by the European idea and it even can be, that we loose the Euro in the long run.
I fear, by thinking, we must kick out Greece now, to limit the costs, we even have higher costs in the long run. We add another error on a long run of errors made in the Euro case.
1. Even if substantial portion of the debt is forgiven, the Greek state runs a deficit with a corrupt clientalistic system built since 1980 that provides Denmark type social benefits with baltic-area economy. Unless this social structure is completely reworked in line with the fundamentals of the Greek economy, there will always be a mismatch and Greek will continue to need bailouts. BTW, this is Europe wide problem where old people voted massive benefits for themselves in the past thirty years and adjustment is needed. Greece happens to be the most extreme case of mismatch. As Angela Merkel says, Europe has 7% of the world population, 25% of the economy and 55% of the social programs. In contrast, the US is only 20% of social spending (if you don't include military). So the US lens is always towards more social spending.
2. Moral Hazard across the Eurozone, debt forgiveness for Syriza will embolden other left wing parties in Spain (Podemos) and Italy to make noise and 'democratically' choose to default on substantial portion of their debts. Spain and Italy are much larger economies with much larger debts, if they decide to default it will lead to massive problems in the Euro area. The German solution is to make the Greek situation so utterly painful (via Grexit if needed) that much bigger problems with Spain and Italy don't come down the line.
Or why the IMF is perfectly happy to lend money it will never recover to the bankrupt Ukraine, but considers Greece to be beyond the pale?
Or why Germany - which has actually had more debt forgiven than any other country in Europe - has somehow managed to persuade everyone that it's a unique model of fiscal probity?
http://www.dailymail.co.uk/news/article-3148451/A-island-pre...
Plus greeks cannot collect taxes. Tax collectors are threatened ("break their legs")
http://www.businessinsider.com/greeces-former-tax-collection...
Ukraine doesn't have a social system that approximates Northern Europe level percentage and they collect taxes.
The debt that Germany owed was imposed by the Victors of WWI and WWII, it wasn't that Germany bankrupted itself into ruin by spending more and not collecting taxes. Pretty hilarious to see people compare Greek situation to Germany after world wars.
2. The banks got a huge bailout as a reward for crashing the economy. How's that for a moral hazard? But when it comes to funding for schools, hospitals, and the rest of the population who got stuck in this depression through no fault of their own a bailout is suddenly a moral hazard? Your view is morally abhorrent.
2. Somehow people think Banks are this magical entity that creates money out of nowhere. Or that some hedge fund money is in the bank. The money that Banks have are deposits of other common people!. So if you don't pay the banks then some common person on the other side loses money. Yes, money that could have been used for schools, hospitals etc. So when Greek people borrowed money, spent it all and now don't want to pay it we are supposed to feel sorry for them. But, the German/French pensioner who has already lost money during prior debt relief in 2010 and 2012, we shouldn't feel sorry for them. Something about Nazis and WWII etc. etc. Strange ideas.
2. Greece CANNOT pay the money back, because they don't have it. The question that remains is whether we punish the Greek people for something they had no say in and did not benefit from. I say punishment here is counterproductive and immoral.
When banks or institutional investors make dumb investments they have to lose their money. The responsibility for due diligence lies primarily with the lender. The amount of interest they charge is compensation for the riskiness of the loan. The banks decided to lend money to Greece and Germany at the same interest rate. That's plain insanity. You can't expect financial mastery from regular people, but you can --and should-- demand it from billion dollar pension funds.
Eurozone interest rates were set at a low level to stimulate the post-reunification German economy, ignoring the risk of over-stimulating (and inflating asset bubbles) in the faster-growing Portugese, Irish, Greek and Spanish (PIGS) economies.
The end result is that the German economy benefited, at the expense of the PIGS economies, which wound up tatters. Even today, the rule-breaking continues; Germany's current account surplus is in breach of the 6% limit defined in the EU's Macroeconomic Imbalance Procedure but the EU turns a blind eye.
The first Greek bail-out deal "was about protecting German banks, but especially the French banks, from debt write offs", according to a former head of the German central bank: http://www.spiegel.de/international/germany/former-central-b...
But even if you decide to ignore how the current situation arose and whose fault it is, the simple fact is that Greece cannot repay the amount of debt it is now lumbered with. Even the IMF has sais that it's "unsustainable". The Greek economy has suffered far worse than any other country in Europe: https://pbs.twimg.com/media/CJYl1rTXAAAQvju.png
The EU is partly responsible for that, and it is morally wrong, in my opinion, for them to refuse to face up to the fact that the only acceptable solution is to reduce the amount of debt that Greece has to repay (and/or extend its maturity to achieve the same result).
EDIT: By the way, it's not like the Greeks have done nothing. They were on course to generate a primary budget surplus this year (i.e. before you take interest payments into account).
Would everyone else please do the community a favor and flag such comments? You can do that (if your account has 30 or more karma) by clicking on a comment's timestamp to go to its page, then clicking 'flag' at the top.
If that proves insufficient, and HN really is incapable of discussing this without devolving into nastiness and slurs, then we're simply going to start killing these stories when they come up, despite the importance and intellectual interest of the topic.
These threads seem to be a hotbed for people articulating their already formed opinions and cannot be read by anyone trying to establish what the facts actually are, which renders them useless to hn.