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Comment by com2kid | Hacker News Reader

The amount of money here seems so laughable.

The EU is crippling Greece, removing their ability to ever restructure or become a healthy economy, over what is piddling amounts of money.

Maybe I am just terrible at reading charts, but it seems to me that based on https://en.wikipedia.org/wiki/Federal_taxation_and_spending_... the US spends hundreds of billions of dollars per year supporting those states that aren't "profitable".

The US would fall apart very quickly if the federal government insisted on handing out loans and forcing the cancellation of aid and welfare programs in states that needed help the most.

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> The US would fall apart very quickly if the federal government insisted on handing out loans and forcing the cancellation of aid and welfare programs in states that needed help the most.

I always thought that was the big difference between the United States and the "United Euro States"--the EU. The USA was founded "fresh" as a place in which states had a measure of independence but ultimately formed a nation at a federal level. That meant that it was in the nation's self-interest to help out states that ran in to trouble--paying off debts, etc.--because helping a state out would help the nation succeed.

The EU was formed with the baggage of centuries of bloody warfare among nations of wildly different and opposing cultures. I don't think that kind of history--and more importantly, the fundamental differences in culture--can be shrugged off in the 50-odd years that the idea of the EU has been around. It would seem that in practice, EU member nations are still very much about finger-pointing, and that can never lead to a successful federal bloc.

When a state goes bankrupt in the US, the other states pitch in at a federal level to solve the issue without divisiveness. When an EU member goes bankrupt, the other members demand blood.

I would say that you're exactly correct, when you say that the EU can never lead to a successful federal bloc. The EU is not a federation, no matter what kind of nicknames one invents for it. EU citizens and member states don't want it to be a federation (some do of course, but they are probably fewer than the people calling for the EU to be disbanded entirely).

It's pointless to compare EU to USA. They are not the same, they were never meant to be the same, and no one wants them to became the same.

I do. (Sort of.)

I want the EU to become a successful federal _economic_ bloc. It already is a semi-successful federal _currency_ bloc. Some bailout institutions based on loan repayments have been created owing to this crisis. We need to go one step further and work out a system of fiscal transfers which upgrades us from a currency bloc to an economic one. We're one step away, that's all. Granted, it's a big step. I don't even mind if it happens covertly in the fine print of some labyrinthine deal because peoples' nationalism is a bogey that should be defeated by foul means as well as fair.

I doubt I'm the only one. I think anybody who calls themselves European first, and their own nation second would agree with me.

What's at stake is not just the debt of Greece, but also Italy, Spain, and possibly others. Forgiving Greece part of its debts sets a precedent for those countries, raising the stakes greatly.

It is a hard problem. Forgiving the debt once is likely the right thing to do, but if you keep doing it, what is to prevent countries from just never paying at all?

The sorts of restructuring plans that are put into place are designed to solve this problem, but I think whoever designed them is a sadist.

It is said you cannot spend your way out of a recession (and I'd agree that one off projects that don't kick start a continued source of income don't work), but you also cannot make so many budget cuts that no one in the country has a job, or a house, or a support network of any kind. Zero tax revenue does not make for a stable government.

(It does make for a really corrupt one though, and a much worse type of corruption than what Greece had before)

If debt is forgiven or defaulted upon, then it becomes harder to borrow in the future (i.e. they must do so at higher interest rates to account for the risk). If countries never paid their debt then no one would loan to them or would loan only at astronomical interest rates.

So Greece will be forced to accept conditions that prevent her ever paying her debt and why? So that other countries will be too terrified to follow in her footsteps?

Is this brutal and bleak blunt instrument really the most sophisticated strategy that we can muster in the 21st century? Can we really do no better?

Well, what is the alternative? Germany admits they've juiced their export driven economy via an artificially depressed currency, then either (1) leaves the euro themselves, or (2) agrees to permanent support to the less-productive peripheral countries inside the currency union?

You may find this interesting: http://blog.mpettis.com/2015/02/when-do-we-decide-that-europ...

> Germany admits they've juiced their export driven economy via an artificially depressed currency, then either (1) leaves the euro themselves, or (2) agrees to permanent support to the less-productive peripheral countries inside the currency union?

Yes. Shouldn't the German national ego be counted less important than making everyone's accounting add up?

preaching to the choir

now what's your strategy on bringing germany around to that pov? Because their politicians are poisoning the environment so that you can't even start that discussion.

Debt are forgiven all the time. Germany had some of its war debt forgiven, by countries such as Greece.

Greece is unlikely to pay back more than a small percentage of its current debt (it will default eventually, no country can lose a quarter of its GDP and then suddenly have surplus budgets). The current scheme is about turning Greece into an example for Portugal, Spain and Italy (who are all playing around with austerity with varying degrees of success). What this all comes back to is that many of the loans should never have been made and banks made loans for stupid and unprofitable projects.

One of the core problems in all of this is that neoliberal political thought is forcing collective responsibility for what was poor commercial and economic management of a few companies, banks and governments on taxpayers in both creditor and debtor states. Responsibility is being enforced through tax dollars going into both debt forgiveness and service cuts. Poor due diligence and risk management on the part of creditors and reckless borrowing is burdening the populations of both "Germany" and "Greece" (where Germany and Greece are the creditor and debtor nations) with the costs.

Europe isn't a country so your example isn't even applicable. If an EU country loans money to another EU country then you can be sure they would like their money paid back in full. They're not charities and these other EU countries have plenty of problems of their own. People like to make Greece out to be the victim, but this was a country that was paying retried people more than what they made when they actually worked and allowed people to retire with full pensions at the age of 50. Sometimes you have to take responsibility for your past actions and this is that time.

The difference being of course that those states are under/part of the same government as all the other states.

Greece is sovereign and run by crooks.

If Greece were under German control they wouldn't even need to cancel the debts, the country would grow so fast that it would be easily sustainable.

> If Greece were under German control they wouldn't even need to cancel the debts

Let's not give them any ideas, ok?...

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