Thomas Piketty: ‘Germany Has Never Repaid its Debts. It Has No Right to Lecture Greece’

This forceful and important interview which is of enormous relevance to not just Greece, Germany or Europe but to India and English-speaking people all across the world, has been translated from the original German by Gavin Schalliol and is being published by The Wire in arrangement with Die Zeit.

In the interview, star economist Thomas Piketty calls for a major conference on debt. Germany, in particular, should not withhold help from Greece.

File photo of Thomas Piketty. Credit: Universitat Pompeu Fabra, CC 2.0

File photo of Thomas Piketty. Credit: Universitat Pompeu Fabra, CC 2.0

Since his successful book, Capital in the Twenty-First Century, the Frenchman Thomas Piketty has been considered one of the most influential economists in the world. His argument for the redistribution of income and wealth launched a worldwide discussion. In a interview with Georg Blume of Die Zeit, he gives his clear opinions on the European debt debate.

DIE ZEIT: Should we Germans be happy that even the French government is aligned with the German dogma of austerity?

Thomas Piketty: Absolutely not. This is neither a reason for France, nor Germany, and especially not for Europe, to be happy. I am much more afraid that the conservatives, especially in Germany, are about to destroy Europe and the European idea, all because of their shocking ignorance of history.

ZEIT: But we Germans have already reckoned with our own history.

Piketty: But not when it comes to repaying debts! Germany’s past, in this respect, should be of great significance to today’s Germans. Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted. The first lesson that we can take from the history of government debt is that we are not facing a brand new problem. There have been many ways to repay debts, and not just one, which is what Berlin and Paris would have the Greeks believe.

ZEIT: But shouldn’t they repay their debts?

Also read: A Simple Guide to the Unfolding Financial Drama in Greece

Piketty: My book recounts the history of income and wealth, including that of nations. What struck me while I was writing is that Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.

ZEIT: But surely we can’t draw the conclusion that we can do no better today?

Piketty: When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.

ZEIT: Are you trying to depict states that don’t pay back their debts as winners?

Piketty: Germany is just such a state. But wait: history shows us two ways for an indebted state to leave delinquency. One was demonstrated by the British Empire in the 19th century after its expensive wars with Napoleon. It is the slow method that is now being recommended to Greece. The Empire repaid its debts through strict budgetary discipline. This worked, but it took an extremely long time. For over 100 years, the British gave up two to three percent of their economy to repay its debts, which was more than they spent on schools and education. That didn’t have to happen, and it shouldn’t happen today. The second method is much faster. Germany proved it in the 20th century. Essentially, it consists of three components: inflation, a special tax on private wealth, and debt relief.

ZEIT: So you’re telling us that the German Wirtschaftswunder [“economic miracle”] was based on the same kind of debt relief that we deny Greece today?

Piketty: Exactly. After the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece. Instead, both of our states employed the second method with the three components that I mentioned, including debt relief. Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.

ZEIT: That happened because people recognised that the high reparations demanded of Germany after World War I were one of the causes of the Second World War. People wanted to forgive Germany’s sins this time!

Piketty: Nonsense! This had nothing to do with moral clarity; it was a rational political and economic decision. They correctly recognized that, after large crises that created huge debt loads, at some point people need to look toward the future. We cannot demand that new generations must pay for decades for the mistakes of their parents. The Greeks have, without a doubt, made big mistakes. Until 2009, the government in Athens forged its books. But despite this, the younger generation of Greeks carries no more responsibility for the mistakes of its elders than the younger generation of Germans did in the 1950s and 1960s. We need to look ahead. Europe was founded on debt forgiveness and investment in the future. Not on the idea of endless penance. We need to remember this.

ZEIT: The end of the Second World War was a breakdown of civilization. Europe was a killing field. Today is different.

Piketty: To deny the historical parallels to the postwar period would be wrong. Let’s think about the financial crisis of 2008/2009. This wasn’t just any crisis. It was the biggest financial crisis since 1929. So the comparison is quite valid. This is equally true for the Greek economy: between 2009 and 2015, its GDP has fallen by 25%. This is comparable to the recessions in Germany and France between 1929 and 1935.

ZEIT: Many Germans believe that the Greeks still have not recognized their mistakes and want to continue their free-spending ways.

Also read: Greeks Remain Proud and Defiant, but Daily Life is Quite Tough

Piketty: If we had told you Germans in the 1950s that you have not properly recognized your failures, you would still be repaying your debts. Luckily, we were more intelligent than that.

ZEIT: The German Minister of Finance, on the other hand, seems to believe that a Greek exit from the Eurozone could foster greater unity within Europe.

Piketty: If we start kicking states out, then the crisis of confidence in which the Eurozone finds itself today will only worsen. Financial markets will immediately turn on the next country. This would be the beginning of a long, drawn-out period of agony, in whose grasp we risk sacrificing Europe’s social model, its democracy, indeed its civilization on the altar of a conservative, irrational austerity policy.

ZEIT: Do you believe that we Germans aren’t generous enough?

Piketty: What are you talking about? Generous? Currently, Germany is profiting from Greece as it extends loans at comparatively high interest rates.

ZEIT: What solution would you suggest for this crisis?

Piketty: We need a conference on all of Europe’s debts, just like after World War II. A restructuring of all debt, not just in Greece but in several European countries, is inevitable. Just now, we’ve lost six months in the completely intransparent negotiations with Athens. The Eurogroup’s notion that Greece will reach a budgetary surplus of 4% of GDP and will pay back its debts within 30 to 40 years is still on the table. Allegedly, they will reach one percent surplus in 2015, then two percent in 2016, and three and a half percent in 2017. Completely ridiculous! This will never happen. Yet we keep postponing the necessary debate until the cows come home.

ZEIT: And what would happen after the major debt cuts?

Piketty: A new European institution would be required to determine the maximum allowable budget deficit in order to prevent the regrowth of debt. For example, this could be a commmittee in the European Parliament consisting of legislators from national parliaments. Budgetary decisions should not be off-limits to legislatures. To undermine European democracy, which is what Germany is doing today by insisting that states remain in penury under mechanisms that Berlin itself is muscling through, is a grievous mistake.

ZEIT: Your president, François Hollande, recently failed to criticise the fiscal pact.

Piketty: This does not improve anything. If, in past years, decisions in Europe had been reached in more democratic ways, the current austerity policy in Europe would be less strict.

ZEIT: But no political party in France is participating. National sovereignty is considered holy.

Piketty: Indeed, in Germany many more people are entertaining thoughts of reestablishing European democracy, in contrast to France with its countless believers in sovereignty. What’s more, our president still portrays himself as a prisoner of the failed 2005 referendum on a European Constitution, which failed in France. François Hollande does not understand that a lot has changed because of the financial crisis. We have to overcome our own national egoism.

ZEIT: What sort of national egoism do you see in Germany?

Piketty: I think that Germany was greatly shaped by its reunification. It was long feared that it would lead to economic stagnation. But then reunification turned out to be a great success thanks to a functioning social safety net and an intact industrial sector. Meanwhile, Germany has become so proud of its success that it dispenses lectures to all other countries. This is a little infantile. Of course, I understand how important the successful reunification was to the personal history of Chancellor Angela Merkel. But now Germany has to rethink things. Otherwise, its position on the debt crisis will be a grave danger to Europe.

ZEIT: What advice do you have for the Chancellor?

Piketty: Those who want to chase Greece out of the Eurozone today will end up on the trash heap of history. If the Chancellor wants to secure her place in the history books, just like [Helmut] Kohl did during reunification, then she must forge a solution to the Greek question, including a debt conference where we can start with a clean slate. But with renewed, much stronger fiscal discipline.

This interview originally appeared in Die Zeit. The German original may be read hereEnglish translation by Gavin Schalliol, an amateur rabble-rouser based in Hamburg, Germany.

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  • Nathaniel Dahl

    Arrogant much?

    • tightlines

      If you mean the germans,yes!

      • Bubbles

        Churchill: “The Hun are either at your throat or at your feet.”

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  • mikemike9

    That happened because people recognised that the high reparations
    demanded of Germany after World War I were one of the causes of the
    Second World War. People wanted to forgive Germany’s sins this time!”

    That is one of the most troubling things I have read in a very long time, if it should be considered an accurate reflection of the German view. It reads as if Germany rationalised needing to be helped out of debt by pretending to itself that it was an entitlement and a correction of a past wrong against them.

    • freediverx

      Even worse, it reads as if modern day Germans feel that starting WWII and the atrocities they committed were justified.

    • chikaraginger

      Many historians, though, feel that is true. Reparations after WWI were designed to punish the losing nation. Those reparations were overly harsh and, in part, led to WWII. The comparison to post-WWII Germany or Europe is, frankly, ridiculous.

      • Jay

        Yes many historians feel this is PARTLY true. Obviously there were many other major factors (many building from before WW1) which were central. However re reparations – see the Franco-Prussian war and the high German demands then (as Piketty points out) which ironically didn’t do Germany itself any good economically. High war reparations were a norm. But the point is their contribution to conditions prior to WW2 should never be viewed as a reason to feel the later debt relief was an entitlement – but rather to view it as it was, that debt relief was an act of positivity and an understanding of our common destiny. If Germany now fails to see the act of faith that was involved in granting her debt relief and helping her to rebuild after the war then she will never learn from the past and the European project will fail.

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  • NickM

    Hmmmm…The situation was completely different. Germany had been bombed pretty much back to the stone age after WWII – there was no infrastructure to work with. Bomber Command has pretty much left Greece alone over the last 50 years.

    • freediverx

      “Germany had been bombed pretty much back to the stone age after WWII”

      And who’s fault was that?

      • chikaraginger

        Careful. Laying fault for WWII or WWI or both is a complicated affair. The real answer: Man. Man was at fault.

        • mikemike9

          That is a relativist position at its finest.

        • Aman Purush

          I tried my best to ignore your flippant comment but it is such an insult to those who died in WW1 and WW2 that I couldn’t contain myself.

          The total number of military and civilian casualties in World War I was over 37 million: over 17 million deaths and 20 million wounded.

          World War II fatality statistics vary, with estimates of total dead ranging from 50 million to more than 80 million.

          Laying fault for these two wars is not complicated. The first one was European tribalism and the second was Hitler and Nazism (there’s more but lets bury that hatchet.)

          The lesson for today is to never underestimate the potential of a conflict like the Greek crisis to cause a widespread conflagration in Europe which will involve the rest of the world.

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  • laserman5000

    Look… when I think of German debt I think of a war torn country. When I think of Greek debt I think of fat-bellied tax evaders and flaunting roof-top swimming pools with mechanical retractable lawn hides to avoid detection by the state and paying luxury tax… Hardly the same. Come talk to me about history when Greeks are as stuck as the Germans were; physically, emotionally and universally lacking the means to help themselves out of debt.

    • michaelward82

      When I think of Germany I think of a country that took itself to war, killed millions and was left with insurmountable debt levels.

      When I think of Greece I think of a democracy that screwed up its economy a little worse than everyone else did.

      However, both points are moot. Whatever the reason either country got in to unsustainable debt, we cannot hold responsible the generations that follow.

      Descendent generations did not cause the problems and did not benefit from them. They will suffer poverty & crime in massive numbers. Resentment will establish itself. Entire generations will lack skills and employment experience. Infrastructure will suffer, inward investment will suffer. The government will not have the money to fix the problems. Tax revenues will continue to fall which extends the time required to pay down the debt and deepens the core problems.

      Austerity encourages further economic stagnation, bakes in economic structural weakness. Long term austerity is a cruel punishment, it is not an effective way to help an economy out of its struggles.

      • Sykobee

        Greece should show that it will change – state retirement age should increase to 67 to align with the rest of Europe, tax evasion should be fought, and so on. But once they have done these things, then they should get debt relief, or debt interest relief, or both. I.e., the next generation will not live outsides its means due to the changes, so we just look to the future and cut the debt so that growth can actually occur.

        Austerity will lead to massive resentment, and inevitable extremist government in the future. Whether that government looks to war as a way to unify the country against the evil of the foreign oppressors can be the subject of a different analysis.

        • Aman Purush

          Greece changed its retirement age to 67 in 2013. Government benefits and pensions can be tackled soon. The tax evasion culture will take some time to eradicate.

          Greece needs debt relief (not debt interest relief) now. You cannot make that contingent on Greece demonstrating that it has changed its profligate habits. You are not disciplining a child.

          • marthaseymour

            Greece may have changed its retirement age in 2013, but has decades to go rewarding people who retired
            in their early ’50s, and some earlier than that if they were in “dangerous” occupations like hair dresser. They’ve also refused to institute a proper tax collection system (despite European offers to advise on
            that). The public sector is bloated and private business hobbled by a maze of silly, competition-limiting
            rules. Why should Europe continue to bail them out if they won’t implement any
            real reforms?

            German debt relief from WWII (one reason for which was the cold war interest of the US and allies) is
            not at all comparable, and Germany didn’t threaten to boggle up NATO without
            it. As for earlier debt relief, it is shocking that Piketty knows so little real history (only the pro-French version). France and the UK, as well as the US and Russia bear much responsibility for WWI, and their desire to crush
            Germany with reparations and land appropriations clearly backfired.

            So that, too, is a very bad analogy that only distracts us from the immediate problem of how to keep
            Greece afloat when it has shown so little interest in real reform (unlike post WWII Germany, which probably rates as the most reformed nation ever). One could even quibble with commenters’ claims that Greece never made brutal and unnecessary war on others, though, granted, that was a very long time ago.

            I’m glad Greece wasn’t thrown under the bus, and would urge significant debt relief when/if they
            actually change their ways. But let’s be realistic and acknowledge that the core responsibility for this mess belongs to Greece (and their Goldman Sachs enablers?)

    • Koen van Hees

      This is the Greek? They all have a pool? They all were fat-bellied? Maybe the problem here is just “When I think of Greek debt I think of fat-bellied…”. Maybe you think strange thoughts. Maybe not all Americans are gun-toting racists? Because when I think of American violence, I think of, you know, every cliché I can think about that ridicules and dehumanizes Americans, because that’s how we roll here in Belgium, you know? We just love our clichés, you KKK bitch (obviously, I mean, that’s how I think of you when I think of you) :-p All clichés brought to you by “thinking, it’s overrated!”

      • logiclaser5000

        “…Using satellite photos, the tax authority discovered that, rather than the 324 swimming pools claimed by the locals, there were 16,974 of them… …In Kolonaki, more than half claimed an income of less than 40,000. Thirty four claimed less than 13,300, a figure that exempted them paying any tax at all. Such incomes defy belief, said Ilias Plaskovitis, the general secretary of the finance ministry… …’you need more than that to pay your rent in that neighborhood’…”. “There are many people with a house, with a cottage in the country, with two cars and maybe a small boat who claim they are earning 12,000 euros a year.. cannot heat this house or buy gas for the car with that kind of income…” If I am wrong about something, let me know…

    • aardman

      Or when you think of German debt, you can think of a country that elected an evil madman and then launched a war on its neighbors, gassed millions in death camps, killed even more millions to create some ‘lebensraum’ and despite all this, received massive aid and debt forgiveness. If this can be done for the sake of the generations that followed the one that committed all these atrocities, this can surely be done for the Greek generations that will follow the ones that committed the far, far less serious crime of corruption and economic mismanagement.

      The Germans today, who benefited from the largesse of its erstwhile victims, have the moral obligation to be just as compassionate towards future generations of Greeks.

      Do not ever, ever say it’s different because Germany was a war-torn country without mentioning that they were the aggressors. Doing so implies that only those who committed the gravest offenses and atrocities are worthy of forgiveness, both moral and financial. That is an incentive system that is totally distorted.

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  • hakmn

    Germany was in the aftermath of WW2 and countries want them to relieved both due to economic and to much lesser extent moral reasons. Shaving off debt will increase spending and other countries will be surely benefited by such spending. Greece doesn’t have anything to offer, they are not suffering from any natural calamity or war like situation, it has mis-managed itself.

    • Daniel Howard

      So your argument is that Germany, which started one of the worst and biggest wars in history resulting in its own downfall deserves to have been forgiven, whilst Greece which is largely peaceful and simply mismanaged its finances through corruption and an inflated currency doesn’t?

  • airmanchairman

    In the 1990’s the last two industrial products seized as war reparations for WWII were finally returned to Germany, one of which was Nivea Body Cream, from the last holdout: the United Kingdom…

  • scxfan

    Afraid conservatives are going to destroy Europe?

    Hey pal, Europe is already a mess and not because of conservatives.

  • Kenji Katsuragi

    It’s “buying and selling” operation and isn’t “financing” that ECB buys national debt of own government from Greece bank and hands currency. Therefore it isn’t a Greek debt.

  • aardman

    Germany, the putative dominant country of Western Europe has been revealed to be a nation of small-minded people. Definitely not ready for prime time. If you don’t have any vision other than protecting your own parochial interests, don’t try to be the leader.

    • Nyayapati Gautam

      Which nation and/or its peoples has a world view that is NOT based on it own interests? Not one. I think we just need to accept this inconvenient fact.

  • Rob A.

    Different situations; no meaningful comparison exists. Greece is like a homeless drunk; you can finance his habit, or you can walk away.

  • aardman

    You mean to say that countries that launch wars of aggression deserve to be forgiven but if your sin is merely corruption and economic mismanagement, then tough luck? What kind of value and incentive system are you operating in?

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  • sbuk

    “History will be kind to me for I intend on writing it.”

    You folk in your ivory towers sure do talk a lot of emptiness. Perhaps when you’ve made history, you can pipe up and pontificate. Until then, please, wind your neck in.

    • Your comment reminds me of Santayana’s phrase, “Those who cannot remember the past are condemned to repeat it.”

  • RSR

    Absolutely correct. When a business declares bankruptcy it is considered a sound financial strategy in which the harm accrues to lenders not the debtor, its the “cost of doing business”. But when a homeowner, student or poor country attempts the same strategy it becomes a sign of poor character and weakness, a moral decision not a financial one. The reason that money was lent to Greece by highly sophisticated banks is that they perceive the risk to be minimal, they expect the ECB to bailout Greece in the same way that Wall St banks expect the Fed and US taxpayer to bailout TBTF institutions. The way Goldman Sachs was bailed out by the Fed at 100 cents to the dollar by way of AIG, so are German and French banks bailed out by the ECB via Greece. Privatize the gains and socialize the losses on the back of ordinary taxpayers is the way its done in modern capitalism.

    • Vladimir Boronenko

      Correct in theory, wrong in practice. Read this for a change (an article dated 2010 btw!). To quote “In 2001,
      Greece entered the European Monetary Union, swapped the drachma for the
      euro, and acquired for its debt an implicit European (read German)
      guarantee. Greeks could now borrow long-term funds at roughly the same
      rate as Germans—not 18 percent but 5 percent. To remain in the euro
      zone, they were meant, in theory, to maintain budget deficits below 3
      percent of G.D.P.; in practice, all they had to do was cook the books to
      show that they were hitting the targets”.

      • 1FrancisofAssissi1

        What an awful, biased comment!

        You deliberately don’t mention that both Germany and France also had deficits well above 3% when they joined the euro, meaning that entry into the eurozone was a political rather than a monetary issue.

        More importantly, you deliberately omit to say that it was the German banks that bribed their way around Greece and made dodgy loans without due diligence, and then demanded that the tax payers of poor states such as the Baltics and Slovakia pick up the tab for German corporate greed.

        Please include all the relevant facts before unleashing a clearly biased, unfair torrent of abuse on the underdogs of Europe.

  • Kneel

    you are twisting piketty’s argument. if I read your rant correctly, your argument is that greece has not suffered much from a war or anything, but it has racked up huge debt, so it must repay that debt. you also mention how britain paid its war debts (without mentioning how it was a colonial power in the 19th century, and that it used this advantage to repay its debts).

    but let’s think about the objective: to make the eurozone strong. do you want greece back up on it’s feet again, at least for the sake of the eurozone? germany hands you a model. forgive greece’s debt (as was done to germany), and let them grow out of their remaining debt.

    btw, you want to talk about irresponsibility? what about bailing out the irresponsible big banks in america who caused the global recession? and you have given no justification for germany’s debt-forgiveness after the war.

    • I am saying a business or a company that honors its debts gains creditworthiness. Economics is about good house-keeping and a good house-keeper knows that reputation is more important than gaudy knickknacks. Once Econ became mathematicised and Game Theoretic, it became scientific. At that point it became possible to see that Keynes was wrong, Ohlin was right about German reparations. Keynes thought the terms of trade would move against Germany if it paid up thus causing a secondary burden. This was really a Mercantilist argument and ignored France’s Nineteenth Century experience of paying off ahead of time a proportionally larger reparation PLUS occupation cost burden. Samuelson showed Keynes’s assumptions were implausible and then a large number of Economic Historician ran the numbers and showed that it is reputational effects and increased depth in the Capital market which is important- not transfers.
      You think the Greek tragedy currently unfolding is a fairy tale about a cruel step-mother, Angela Merkel, seeking to put Snow White to sleep in an endless torpor of economic stagnation. What model of the economy are you implicitly relying on? Is it not the Mercantilist notion that what makes a country rich is Gold? If Greece pays its debts it has less gold and gets poorer. So, the Germans are being nasty to the Greeks because, like the dragon in Lord of the Rings, they want to sleep on a yet bigger pile of gold.
      I am sorry to tell you that the history of the last two centuries does not confirm your model at all. If fraud or extortion of gold from another country could make an economy stronger then Spain, not Holland, would have been the marvel of the Seventeenth Century. Britain would have sunk without trace after the loss of the American colonies. This did not happen because British politicians decided that the wealth of the Indies, though access to it was only possible through the tax payer funded Royal Navy, nevertheless stay in private hands. Britian’s Empire, after a windfall of ‘primitive accumulation’ settled down to paying a dividend through the creation of new industries and the seeking of new markets. It was only once Moralising Mercantilism of a corrupt sort- Chamberlain’s Imperial Preference, Milner’s ‘Kindergarden’, Keynes’s stupid monetary policy recommendations for India- that the Empire dragged Britain down in the same way that Spain and Portugal had been dragged down by their Empires. Indeed, Portugal only began to do well by its working class after the lost the last of their colonies.
      I want Greece back on its feet. For this to happen, workers and investors have to have confidence that it is on a sustainable growth path. This can only happen if it has a responsible Govt. determined to improve the long term prospects of its people.
      An artificial boom- whether created by fraudulent borrowing or a speculative hot money in-flow- is no good at all. A talented worker will vote with his feet and head for a country, like Germany, where he sees that prudence is being exercised, speculative booms in unproductive things like Real Estate are curbed, Trade Unions don’t seek the highest possible wage but the most sustainable growth path for living standards, Govts. don’t reward their cronies and indulge in unjust enrichment on a breath-taking scale.
      There is an argument for protection and mercantilist transfers to an under-developed country which has no Knowledge base. Greece, on the other hand, has some of the brightest people in the world. It does well in internationally traded goods and services like petroleum refining and shipping. Why isn’t Athens the rival of the City of London or Frankfurt? It’s because successive Govts. have indulged in windy rhetoric and looked to a small nepotistic coterie of oligarchs.
      Germany after the War had a terrible reputation. Thankfully, it was occupied territory. Even if it wanted to, it couldn’t go back to its bad old ways of looting its neighbors and (under Weimar) borrowing in bad faith. But, the Germans had learnt their lesson. They saw that reputation is everything, gold nothing. If you have a good reputation the gold comes to you and does good in the process- it builds factories and research institutes.
      You say I have given no justification for the German 1953 haircut. I did. France didn’t want Germany to run too big a trade surplus otherwise its own re-industrialization was endangered. I didn’t mention the more obvious point. Turn West Germany into a golden goose and suddenly the Commies are clamoring for a share in the feast. The Allies didn’t want nuclear sabre rattling because it would have scared off investment. Incidentally, the quid pro quo was the Soviet withdrawal from Austria (on which they weren’t making a profit) in 1955.
      You think Economics and International Relations is about things like ‘forgiveness’ and warm fuzzy feelings.
      Do you really think Men are good and only Gold is bad? This may be true of the dwarf King in the recent Hobbit movie, but dragons and dwarf Kings don’t actually exist.
      What you owe doesn’t matter, what matters is if productive economic activity is burgeoning within your demesne. Working class people get jobs, jobs with prospects, when long term capital flows, not loans or ‘hot money’, is attracted to a region.
      Why are bringing up the bail out of banks in America? When did I say I supported that? What I support is incentive compatible mechanism design to make Public Sector investment more productive and transparent because, where there is spare capacity, the Govt. is best placed, and has an obligation, to correct for the market failure.
      Politicians don’t want to take responsibility for such a role. They prefer to spin out moralizing fairy tales.
      I don’t blame you for echoing their rhetoric. After all, a lot of ‘Public Intellectuals’, who ought to know better- like Sen, Piketty and even the egregious Yanis- are making money by jumping on this ‘dungeons & dragons’ bandwagon.
      Yanis, whose motorcycle has sprouted wings, is probably on his way to Hollywood to star in a new ‘Lord of the Rings’ or ‘Game of Thrones’ type franchise. Good luck to him. Now he’s gone a less glamorous, more Marxist, public school boy is talking turkey not cock.
      The Greeks are smart. Now they’ve got all the Periclean rhetoric out of their system they’re going to sit down and figure out how to make Athens the financial and R&D hub of the Meditteranean.

  • Alessio Pinna

    It could be easily argued – as many other “top economists” did, which just makes a joke out of the whole category – that Greece’s problems stems from the lack of implementing free market policies. They cut spending in wages and pensions, true, but stuff like privatizations, better tax checks, incentives to production and less burocracy are still untouched after 5 years. Beside, high interest rates? Really? Greece paid in interests as a share of gdp less then Germany, even though its debt – always in terms of gdp – is 2 times that. Doesnt that tell you enough on how much they actually pay on “interests”?

    • Tris De La Tan

      How exactly does sale of assets well below any reasonable market price constitute a sound policy and exactly what successful privatizations can you name us?

      The one thing that can truly be argued is that banks that are too big or intertwined to fail is what gets us in this mess and we should demand change or else.

      And yes, it will ultimately be “or else”, there is no doubt about that.

  • jimmywalter

    The whole Point IS to destroy Europe! The UK and the US, the Special relationship, want any Eur-Asian Empire destroyed. They are just as much a threat, in their schoolboy Outlook, as Russia. The CIA has run Germany since WWII. They and the radical Zionists control the press. Not the Jews, not the peaceloving People in Israel, but the war mongers and the US MICC (Military Industrial Congressional Complex – Eisenhowers original Label for it. On the loan issues, Doctor BioBrain got it right . A small Addition, the Greek character was well known Long before the ECB lent them money. However, they incorrectly thought that Sovereign Loans would have to be repaid, like the Bankers of wall street, Moody’s, and S&P who gilded the poison loan packages. They are paid big bucks to know. Goldman Sacks (pun) trained the crooked politicians to defraud the public! Who, again, was fired? Prosecuted? Why is not the ECB calling for their Arrest? Because they are Bankers! But we have to punish the poor Greeks who had nothing to do with it?

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  • tpoccu

    Greece hasn’t lost a war because it didn’t start one, or is that what needs to happen, have them start trying to take over the world, whilst attempting to commit mass genocide? Is that what it takes for their debts be forgiven?

  • Reprobus Marmaritarum

    Still. He did see off Hitler.

    • Actually, the Allied Armies lead to his suicide.

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  • Nelson Lopez-Toledo


  • Karin Adams

    It will be in the interest of Germany to come to an arrangement with Greece, otherwise Greece will look towards Russia and China for help.

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  • Doki Tops

    Apples, oranges, this is I believe the 4th bailout package. Many opportunities for Greece to show progress. It was visible late last year, then Tsipras, varoufakis no action from Greek government, referendum and then the trust was truly gone.

    I do believe that a debt relief needs to be on the horizon, provided taxes and pensions have been restructured

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  • mathmojo

    Give the Germans a break. Look at what they accomplished after the war, after all. (With free American money and cheap Turkish labor.)

  • Peter J

    I would love to see a comparison on how much debt Germany actually paid in total numbers versus France and Britain? One thing is for certain: Germany was burdened by unprecedented demands for reparations after WW I which most economists at the time considered unreasonable and impossible to ever repay. These amounts were partly reduced before and after World War II. However, much of it was paid. Add to this the loss of German territory to Poland and the Soviet Union after WWII and the subsequent confiscation of the property of 14 Million Germans, their expulsion etc.

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  • BetterFailling

    Things are a tad more complicated than that.
    The BBC posed a very interesting question yesterday:

    “How damaged is eurozone and EU by Greek debacle?”
    Taking into account the fact that Germany has everything to win from the well being of the EU it seems that Ms. Merkel is acting against the best interests of Germany. Even if her actions fit the short range interests of her party.

  • Ralph Schneider

    How illogical (typically fuelled by holier-than-thou self-congratulation) some people are to maintain that “despicable” Germany was helped to recover purely out of kindness by its WW2 arch-enemies!

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  • Bruce Mendes

    So Greece has lied, obfuscated the truth, fudged the numbers to get in the EU. They borrow money that they cannot repay, have an absurd number of employees on the government payroll and collecting pensions. They have an uncompetitive, inefficient economy that they refuse to reform. They refuse to pay their taxes and made an art form of tax evasion. And now they have their hands out demanding more money from lenders and then they have the balls to complain they don’t like the terms? What is wrong with this picture?

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  • 1FrancisofAssissi1

    That’s exactly what they said about the Nazi war machine and tiny Greece in 1941.

    And yet look what happened!

    If Greece is right and it is being scapegoated for the bailout of dodgy German and French banks, and it is shown that the German plan was unjust because it shrunk the Greek economy unnecessarily by 27%, then justice will prevail and 1941 will be repeated.

    If however the Germans are right …

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