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Comment by jsprogrammer | Hacker News Reader

>There's a very clear difference between a country that comes out of two world wars, with everything all but destroyed, including millions dead.

Which allows us to provide a further distinction: the country who had everything destroyed was directly responsible for that destruction. Yet, the debt that they racked up because they tried to take over eurasia while killing and torturing millions in the process, was forgiven not many years after the killings and torturings took place.

I think there should be a distinction between a country that kills and tortures millions and one that does not. So, why again should we forgive the debts of those responsible for killing and torturing millions, but not those of a country who has done nothing comparable?

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>I think there should be a distinction between a country that kills and tortures millions and one that does not. So, why again should we forgive the debts of those responsible for killing and torturing millions, but not those of a country who has done nothing comparable?

Because the Treaty of Versailles was tried the first time, to penalize Germany with onerous debts for starting WW1, and WW2 was the direct result. After WW2, the Allied occupiers weren't thinking, "How can we penalize Germany?", they were thinking, "How can we prevent another damned war!?".

Unfortunately, this time people are still thinking, "How can we penalize Greece?", as if that will help the EU at all in the future.

But they are thinking "how can we prevent this again?" with respect to Greece - for example measures against corruption, unaffordable levels of welfare, and high tax avoidance. Without those measures, if they just hand over money with no strings attached, it will just be kicking the can down the road.

No, they're thinking "How much money can we rescue tomorrow."

And that's all they're thinking.

Piketty is right - it's atrategic idiocy of the first order.

As for tax avoidance - some countries, including the UK, have based significant sectors of their economy on tax avoidance.

In the same way that it's immensely hypocritical of Germany to lecture Greece on debt, it's equally hypocritical of the Eurozone to lecture Greece on tax avoidance, when the bankers and corporates know damn well that if they weren't avoiding taxation at least as aggressively, austerity would be completely unnecessary.

But of course they mean tax avoidance by working class people, which is a very bad thing, and not tax avoidance by corporations, banks, and oligarchs, which is a very good thing.

It's this kind of twisted self-serving nonsense that has created the situation in Greece. Sovereign debt is a symptom of much deeper problems, not a final cause.

A little from column A, a little from column B. Of course creditors are after their money, that's what loans are for. And anti-corruption measures do have the ability to work well.

For example, during the early 90s, Australia had a recession. Due to this recession, more stringent banking laws were introduced. Fast forward to the GFC, and the entire globe is running for cover. The Australia dollar tanked because everyone thought that the economy would die and the banks would collapse. On the contrary, due to the tightened banking laws, the 'big four' Australian banks all kept their credit rating. All of them. At a time when most banks were slipping.

Times of national pain like this are the times to slip in significant reform. Greece has an endemic corruption problem, and independent of anything else, this is a good excuse to 'stop the rot'. Or we could just point fingers everywhere, make it no-one's problem and no-one's responsibility, and not progress at all.

And if you've been watching the news lately, the big economies are all looking at ways to counter tax avoidance by corporations, as it's a significant problem. It's a complete misrepresentation to say that there's no concern or effort being made there.

Australia was bailed out in the financial crisis by high and rising commodity prices, and the banks are supported by a massive house price boom.

> In the same way that it's immensely hypocritical of Germany to lecture Greece on debt, it's equally hypocritical of the Eurozone to lecture Greece on tax avoidance, when the bankers and corporates know damn well that if they weren't avoiding taxation at least as aggressively, austerity would be completely unnecessary.

Especially with the head tax avoidance manager at his head, Jean-Claude Juncker.

That said, my understanding is that there are real issues with the Greek state - not only cronyism and corruption, but lack of fundamental mechanisms like a proper welfare system or a cadastre. These issues need to be addressed, but seems at odds with the creditors' obsession with slashing public spending at all costs.

I also agree with Piketty about the way the crisis served to highlight systemic issues in the EU. Unfortunately, EU leaders appear completely unwilling to address them, apparently pretending nothing is wrong is much easier.

Indeed, the Greek government has many problems to solve, but many require investment. Rooting out corruption costs money and is hard to do in a crisis where you may not be able to pay your bills at all from day to day.

And austerity has been shown to be a remarkable failure for any form of economic recovery not just the first, but pretty much every time any country has tried it

Why would you try it on Greece then?

How would you define austerity for the Greece? To have public spending at 58% of GDP?

If your economy collapses, partially because of global recession and partially due to corruption enabled by cheap foreign money looking for a quick buck, your GDP ratios all look worse all of a sudden.

I'd define it as me paying 90% taxes last year, while my country is still getting worse.

Austerity isn't about rising taxes, as much, as about lowering government costs.

I'll put it this way.

World War I: Germany loses, is forced to pay not just debt, but reparations. Huge economic and political instability as a result leads to a new leadership which leads directly to World War II.

World War II: Germany loses, is split up, due to the Marshall plan (in part do to a fear of Communism, so not solely due to compassion), West Germany given millions of dollars to rebuild, a rather thriving democracy and economy is created as a result.

Which of these is the better option?

Probably the one where the country that is indebted and in need of development gets 60% of their debt forgiven and an stimulus plan.

I guess it's not clear what you're arguing then. It seemed as though you believe Greece's debt should not be forgiven.

[Note: Germany paid less than half of its WWI reparations, until recently. I'm not sure what WWI debt you are referring to though.]

In "The Economic Consequences of the Peace", there is argument that the original reparations were make-believe and impossible. The 1929 revision was probably closer to reality and Germany did recently repay them. [at least according to news articles from 2010]

Germany was _forgiven_ over 50% of it's post war debts. By my rough calculation, 35B+ in today's dollars.

Yes, it was "forgiven" 50%, but at least in that book, the author explains that the process of how the original sum was calculated was that France asked for an unreasonable sum in the first place.

West Germany did repay some of the defaulted WWI debt to help rebuild their reputation after they lost WWII.

Also, there is another gigantic difference here, Germany lost a bloody war and we told them how it was going to be, we restructured their economy, wholesale, and they were in no position to disagree. About half the debt was forgiven because they did what we made them do. If Greece wants to put their sovereignty on the table and let their creditors structure their economy for them, that's a very different negotiation than what they've had. Further, the west wanted a strong Germany between them and the communists, what's Greece got to bring to that table?

All this hypocrisy talk misses the point. Greece should go elsewhere to finance their debts if they don't like dealing with Germany. With their history, lifestyle, economy and government, I think that will be a challenge. Nothing prevents BRICs from investing there, they just don't seem that interested. Nations aren't individuals but try to go negotiate with a pawn shop or payday lending place, it sucks to need money and not have options. Sure, Germany has defaulted in the past, Greece can crap on then when the tables are reversed...

> the west wanted a strong Germany between them and the communists, what's Greece got to bring to that table?

Continued loyalty to NATO and the EU? http://www.reuters.com/article/2015/07/03/eurozone-greece-ru...

Wow. I wonder how the default talks go with Putin...

Strangely enough, that's exactly what Piketty was talking about in a recent interview with the digital edition of Le Monde. "Let's just kick Greece out of the eurozone" people have no idea of what they're doing.

According to e.g.:

http://www.spiegel.de/international/germany/legacy-of-versai...

Germany did repay the WWI reparation debt.

In 2010! That's almost a century from 1918. If Germany had to repay reparations from 1945, it would probably be repaying WWI debt to this day.

Lets not forget that Germany also lost a third of its territory, so its not as if they got away that easily.

> If Greece wants to put their sovereignty on the table and let their creditors structure their economy for them, that's a very different negotiation than what they've had.

Given that even the IMF have admitted that pretty much all their projections were flat out wrong for Greece, of course the Greek government would be total idiots if they did this.

> All this hypocrisy talk misses the point. Greece should go elsewhere to finance their debts if they don't like dealing with Germany.

This is missing the point: Sure, Greece can't demand whatever they like. But at the same time, it is irrational for Europe to treat Greece this way, because all it achieves is weakening the Greek economy further, which nobody benefits from.

If the EZ governments wants to lose all the debt, that's a good approach. If they want some of it repaid and would like Greece to remain a viable part of the common market, it's not.

In other words, Greece should declare war, and get occupied? (It probably would be better for them than what's going to happen). If only there was a way to resurrect Marshall and Ike, and make them dictators over Greece…

https://en.wikipedia.org/wiki/The_Mouse_That_Roared

There's an argument to be made that the debt forgiveness came after the realization that maybe the WW2 was also a result of the crushing debt imposed on Germany after WW1.

It's questionable how directly Versailles caused WW2.

WW2 was caused in no small part by the Wall St Crash, which was a direct cause of hyperinflation in Germany, and by delusional industrialists who thought that financing Hitler would be a good way to avoid a revolution.

At least one of them - Thyssen - ended up in a concentration camp. So that didn't work out so well for him.

The others have never been held accountable.

Weimar could easily have been rescued if the Nazi party hadn't received literally millions in external funding and other forms of corporate support. In a counterfactual reality, Europe would probably have united more quickly and peacefully. Technology wouldn't have developed as quickly, but there would have been an arms race and perhaps a war with the Soviet Union sooner or later.

Some background:

http://www.businesspundit.com/10-global-businesses-that-work... https://en.wikipedia.org/wiki/Fritz_Thyssen

> WW2 was caused in no small part by the Wall St Crash, which was a direct cause of hyperinflation in Germany

Could you please clarify how the Crash of '29 caused hyperinflation in Germany in the early 1920's?

Or do you mean the August 1919 to December 1920 slide? That doesn't suffer from violations of the law of causality, but nor is there any evidence that it caused the Weimar government to print ever increasing amounts of money in higher and higher denominations, which started in June 1921, six months after Wall Street had started to recover.

https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...

I'd draw a distinction between debts incurred by a democratically elected government and otherwise.

I also think reparations are fundamentally different than loans. Comparing war reparations to loans is blurring the lines to make a political point.

Think of it like this: when a country needs to 'borrow', they're selling bonds. An investment vehicle. If you buy bad bonds as a typical investor, no one bails you out - you lose your investment. That's how it should have gone for Greece. Their 'investors' should have lost during the crisis, like everyone else, instead the Euro governments bailed them out and created this prolonged mess...

That ingores the impact on the poor and pensioners of Greece. Just let them starve?

They wouldn't starve. Many countries have survived a default without people starving. Presumably, in the case of a Greek default, the government would be using the money to pay pensioners and give welfare instead of paying bond-holders...

Sorry, I misread what you were saying. I agree.

The bond holders with Greek government bonds did lose, their debt was restructured with a 50% haircut. It was the bank loans that were bailed out.

> I'd draw a distinction between debts incurred by a democratically elected government and otherwise.

I think that's a good point in principle, but remember that the Greece's poor suffer the most. Drive through a poor neighorhood in town and consider how much influence the residents have over national economic policy.

No one's questioning that Greece's poor will be hit the hardest. But neither does it help them to blur the meanings of reparations and debt for the sake of creating a scape-goat.

What makes you think they will be helped by loans if they are made to Greece? Won't those funds just go to a slightly different permutation of politically connected folks? Moreover, you point to the poor in Greece. Why should they be privileged over the slightly poorer in, say, Bulgaria, who will hear a fractional brunt of a Greek bailout?

Okay, but why are you doing backflips to avoid placing any blame on reckless creditors? If idiotic European governments elected to bail out the private, sub-prime lenders whose bets in Greece had gone bad (due, in large part, to the credit bubble inflated by the same lenders) why should the Greek people pay for a shitty decision made by French and German politicians?

The Nazi government was more or less democratically elected, at least as much as Greece's government.

Germany had loans forgiven less than one decade after they were systematically killing tens of thousands of people per day in gas chambers, human ovens, or worse and barely twelve years after they had firebombed London and other cities, resulting in 40,000 dead civilians.

This is beyond ridiculous and in fact insulting to recent Greek governments. Come on, do you really think the media landscape and average knowledge of voters in 1933 in Germany was anywhere comparable to elections in Greece from 1990 onwards? Germany only became democratic after the 1st world war, had totally unstable governments, a head of state who openly did not believe in democracy (Hindenburg), the great depression hit and SA troops were beating people up in the streets.

I wonder why Germany never suffered any consequences for what they did in WW2.

Oh, wait. They did. https://en.wikipedia.org/wiki/Yalta_Conference

> I think there should be a distinction between a country that kills and tortures millions and one that does not.

Which reminds me...

https://en.wikipedia.org/wiki/Greek_Civil_War

158,000 killed due to those bloody stupid Communists :(

Here's another take on it:

[1]"As the war’s outcome became apparent, British Prime Minister Winston Churchill was determined to return Greece to the prewar rule of the monarchy and the old regime. He was motivated by fear of Communist influence within the resistance movement.

Churchill tried to get the Anglo-American army that was getting ready to invade Italy to attack Greece instead. Indeed, he tried so hard to change the war plan that he almost broke up the Allied military alliance; when he failed, he threw all the soldiers he still controlled into Greece and precipitated a civil war that tore the country apart."

[1] http://www.democraticunderground.com/10026942363

You mean damn those Greeks wanting to run their own lives? Something that was violently crushed and kept through an oppressive military junta?

As a left-wing guy, I find that comment funny. Ask Poland or Hungary how much Warsaw Pact nations enjoyed "running their own lives". And the junta was not before the end of the sixties.

> I think there should be a distinction between a country that kills and tortures millions and one that does not.

There isn't a major economy in the world that this does not describe. Perhaps not India. The "Race for Africa" was a low point for the UK and France, for example.

Please list one instance when the modern Greek state did as described.

Greek invasion of Turkey in 1919 was pretty ugly although the scale was different.

Please list one resource which describes the modern Greek state as a 'major economy'.

They can still claim some moral high ground in that, were they to go bankrupt today, colonialism was not directly the cause. That's not the case with Germany in the 40s/50s.

The debt forgiveness of Germany post-WWII shouldn't just be seen as altruism. The Soviet Bear was seen as a major threat by the Allies, and having a healthy buffer state was a significant factor in making policy around West German finances.

If Greece was a buffer state against some monstrously powerful ideological opponent, you can bet that we'd be seeing considerably different politicking going on.

I wouldn't see it as altruism either, but I think you discount the fact that the Allies did not want a third war with Germany. There were factions within the American government that wanted to turn Germany into a deindustrialized field, but instead they built Germany up into a strong ally. It was more than to just counter the Soviets: They removed the German threat for good.

Of course India (or its historical antecedents) have killed millions, though it's been primarily other folks on the subcontinent. I agree with your point otherwise.

Following your lead: Then let's start by assigning a value to each person killed in WWII and the moral righteousness (or lack thereof) leading to the person's death. Yes quite the humane and reasonable trait in a time of total destruction. Very helpful.

Your post actually prove's the other author's point: Your clear opinion of responsibility is shown and thus it would be clear to me, how you as a winner's negotiator in that time after WWII would have "accounted" that debt.

I'm not sure what you're arguing. Are we going to assign values to each fault of Greece as well and then compare them to your WWII calculation?

>Your post actually prove's the other author's point: Your clear opinion of responsibility is shown and thus it would be clear to me, how you as a winner's negotiator in that time after WWII would have "accounted" that debt.

My clear "opinion of responsibility"? You mean, my assertion that Germany was responsible for the destruction mentioned by sgnelson and the killing and torturing of millions that I brought up? Do you reject that assertion?

Modern debt is an inherently ridiculous proposition. It can only ever expand or collapse. The longer the world tries to solve its problems using it, the more comical it becomes.

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