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Piketty: "Germany Has Never Repaid Its Debts; It Has No Standing To Lecture Other Nations"
One year after Tomas Piketty sold a record number of economic textbook paperweights which virtually nobody read past page 26, once again showing the power of constant media hype, the French economist and wealth redistributor is out and about, this time pouring more gasoline on the fire started by the IMF last week when it released the Greek debt sustainability analysis showing Greece needs a 30% haircut, only to be met with stern resistance by, who else, Germany who know very well that should Greece get a debt haircut it will unleash the European dominoes which not even all the bluster and rhetoric of the ECB can halt.
And while Piketty's book may have sold out in socialist France, it seems Germany did not leave a pleasant taste in the celebrity economist's mouth, and in an interview with Germany's Zeit magazine, translated into English, the Frenchman just made sure he will never sell another book east of the Rhine. Here is the reason why:
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.
... 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.
What he said is perfectly factual and accurate, but in the new normal, truth is not a welcome commodity, especially when it pulls the scab on the single biggest problem with the modern economy, namely the gargantuan debt overhang (see Greece) which nobody can possibly default on without triggering massive contagion around the globe and thus leaving (hyper)inflation as the only possible way out.
A good question is whether this philosophical contrast exposed by Piketty is also indicative of the fundamental schism that is appearing not only within the Troika, where the IMF effectively won Tsipras' referendum for him, but also within the Eurogroup, where Germany may soon find itself increasingly isolated as not only peripheral countries but soon France start clamoring for debt haircuts not only abroad but also back at home...
Full interview:
Thomas Piketty: “Germany has never repaid.”
In a forceful interview with German newspaper Die Zeit, the star economist Thomas Piketty calls for a major conference on debt. Germany, in particular, should not withhold help from Greece. This interview has been translated from the original German.
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?
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 recognized 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.
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 criticize 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 was translated by Gavin Schalliol.
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Bravo. The truth hurts.
Piketty is a lying slimy collective socialist shill...yeah..hes a bitch. After his rimming of kirgman on keynsian retardedness....hes a piece of shit.
Show any of them had the money to lend and the can of worms opens.
RIPS
Picketty is a slave-boi to left wing governments.
They like giving it in the behind and he's thrilled to take it, which is OK if you roll that way, but he wants everyone to get it good and hard.
Clearly Picketty has standing to lecture other nations.
Communist sack of shit.
A brilliant refutation of his Marxist book "Capital in the 21st Century" can be found here:
http://www.georgereismansblog.blogspot.de/2014/07/pikettys-capital-wrong_28.html
He might be a lying sack of shit, but he's right. Foreign debt service ranks right up with derivatives and whatever else worthless shit the banks are calling assets these days as THE problem. Get rid of it all. That's the only way to get back to a decent monetary standard.
This ass-Piketter has no clue about history. The overwhelming scam foisted upon the Germans after WWI known as the Versaille Treaty was a travesty. Never has there been a more egregious example of "Victor's Justice". The reparations the Allies expected Germany to repay were completely untenable. So, this dweeb dares to preach to us about this? Go back to your ivory tower at whatever Ivy League school you attended - where such ludicrous claims have imaginery validity.
Yeah it does appear Germany doesn’t have much room to talk in the debt department. That said I don’t have any time for Picketty, anyone who would blame income inequality on some inherent flaw in capitalism, r>g, instead of the actions of central banks which essentially hands money straight to the rich doesn’t deserve much attention.
WTF!!!??
GERMANY DID REPAY ITS WW I REPARATIONS AS OF 2010
http://content.usatoday.com/communities/ondeadline/post/2010/09/germany-...
PIKETTY YOU FUCKING MORON!
Piketty should study history.
Adolf Hitler's financing included Ford, Rockefeller and Harriman money:
http://www.reformed-theology.org/html/books/wall_street/chapter_07.htm#Some%20Early%20Hitler%20Backers
From: Wall Street and the Rise of Hitler by Antony Sutton
http://www.reformed-theology.org/html/books/wall_street/index.html
But they had half their WW2 debt forgiven in 1953 under the London Debt Agreement.
"Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.[2]"
I truly hate Piketty but get your facts straight.
https://en.wikipedia.org/wiki/London_Agreement_on_German_External_Debts
The Greeks had 60% net present value debt relief in 2012.
Should it have been 100%? Perhaps.
But Piketty is utterly disingenuous to suggests no debt relief has been forthcoming.
If you're talking about PSI, keep in mind that the state raided the reserves of hospitals, universities, schools and pension funds, turned them into Greek junk bonds then did a haircut on said bonds. Not much of a debt relief there. More like destruction of basic sovereign infrastructure.
Did you read this part: "The initial sum of 269 billion gold marks, the equivalent of 96,000 tons of gold, was reduced to 112 billion gold marks by 1929."
Stop banging your head and focus on the facts. Greece needs a similar concession, this isn't about economics its about politics. Economics is not a war weapon. You can't undo the massive financial loss resulting from war and neither can bad lending policies. Its a simply accounting line item, its called "bad debt". That is economics over ruled by politics. It comes under the heading,"Shit happens".
Never let facts intrude upon a socialist rant.
What Piketty says is BS, a few years ago, Germany paid the last annual rate (a few millions Euros) to France following the Versailles treaty dictate. Same to other countries. Piketty is just a "good old" french communist/socialist, that's all. The Euro was a french idea (Delors, Mitterrand, Attali), so France should bear all the costs. The haircut after the war was ~55%, but Germany since then paid hundreds of billions in subsidies to it's neighbour countries through EU, also to France's farmers. This is war reparartion/debt repayment toooooo.
Greece has never paid back any debt, has been broken half time since it's existence. Greece got since it's entry to EU (~1980) more than 500 billion €:
* >150 bill. € from EU subsidies
* >100 bill. € first haircut 2012
* >350 bill. € now outstanding and since it is broken, they will "cash it".
Please get your facts right. Its not for others to correct your rantings so do the research.
Germany has never paid war reparations to Greece, one of the nations it obliterated in WW2 and has never signed a peace treaty with Greece. In addition, concerning honoring debts, Greece has defaulted 5 times in its history and NEVER reneged on its old debts but honored them in full.
Also, check your facts, you still believe the EU loans went to Greece? Then how is it possible that Greece is still in such a state?
You are wrong. In the beginning 1960's, Germany made a treaty ("global reparations agreement") with Greece about 115 mill. DM at the time. In todays buying power, that would be quite a few billion €. So there were reparations. And dont forget, Greece got > 150 bill. € in subsidies, mainly paid by Germany. Subsidies are easier to sell to the German voter than "war reparations", but the result is the same, money flows.
If you want to look where this money got in Greece, go to the noble quarters of Athens and ask the elected family-clans that are/were in power in Greece for the last decades.
Greece never payed anything back, unless they took new credits to pay off the old ones. You can only pay something back if you export more than you do import. Has Greece ever had a positive balance of current accounts in foreign trade? Not that I remember ...
Grexit now ! Greeks need to live within their means, that's only possible with the Drachme and outside the "free money"-Target2-System.
Concrening war reparations: https://en.wikipedia.org/wiki/German_reparations_for_World_War_II#Greece . Just because the Allies arbitrarily signed off the war reparations on behalf of other countries involved in the war does not mean that the other countries agreed to their resolution.
Concerning Greece's debt history: http://greece.greekreporter.com/2014/01/26/born-in-debt-greeces-history-...
Concerning the Greek debts to EU/IMF/ECB: http://www.zerohedge.com/news/where-does-greek-bailout-money-go
You are correct that EU funds were squandered by going into the pockets of the elite. And I totally agree with you that we should exit the EU and print drachmas and, if I may add, declare the debt odious.
http://www.zerohedge.com/news/2015-06-17/greek-debt-committee-just-decla...
Yes, the deal should be €-exit (not EU exit, I hope) against haitcut (since anyway, Greece won't be able to redeem most of the credits).
Still better IMHO would be a complete disintegration of the €, starting with a Dexit.
And yet, his discussion centers around default and some sort of economic justice to allow proper schools to be built, and not one word about staying out of debt. Oh God, the hardships we would endure if forced to live within our means!!!
By all means borrow and spend, and then foist the debt onto whatever public remains that is still stupid enough to work. Never, not once is there a suggestion that we tend our own garden, rely on not the thievery of State but our own productivity and skills.
NO, our path to prosperity is always through theft. The key is to always make those being robbed believe they are the robbers. If you should endeavor to actually work and save, then yes, you deserve to be FORCED to support those who will not....just as he says, because that is always been the way it is done.
Fucking assholes would like to put everyone who actually works and saves to have a better life in the same category as the fucking thieves these elitists represent.
Just as we can no longer refer to illegal immigrants as anything but immigrants, and anyone who resists illegals are to be shunned and called racists and bigots, so is now anyone who has anything worth stealing called a thief....except those handing out such judgements of course as they are but doing God's work, or THEIR God's work....what ever rock he resides under.
THANK YOU!!!! I kept scrolling down hoping someone would weigh in on the little inconvenience truth. Many feel that this was the reason for Hitler rise to power that lead to WWII. Did Greece go to war with the EU and as result debt was, as you so succinctly put it, "The overwhelming scam foisted upon the Greeks". I will dare to suggest that the two were very different situations. As a country, the Greeks did not have to accept the wad of money. Instead, they should have been looking for investors that foster economic growth not predatory scams. Everyone is guilty here.
But it is obvious to me that this is yet another attempt by socialists, communist and everyone else of that ilk, to show how bad capitalism is. Trying to snatch victory or vindication out of the jaws of defeat. A defeat of which has been completely demonstrated for all to see. Yes not even the proverbial Sweden which collectivists like to point to as a success. The world is on fire, everybody is broke and it begs the question. Who's holding all the cards? It is rather strange. Unless, could it be, No! there I say it; A FUCKING SCAM
Every thief in history has attempted to use all prior thefts as rationalization of their own. This asshole would turn the world on its head to promote his collectivist theme. Never once suggest that we should all be held to a higher expectation, one premised upon NOT relying on theft (or debt if you prefer) to achieve prosperity (a word you will NOT hear them use). Progressives continually discard conservative or traditional values like thrift and hard work and accountability until they find a statistical nugget of bullshit form history that can be used to justify their continued destruction. Yes, the answer is debt that is converted to theft...the ultimate redistribution tool.
Over simplification. Look up how much of the German debt was convert to "theft" as you call it and maybe you see why.
Isn't it amusing that bankers used their paid off politicians to talk about 'morality' when they want to rape the public - but none of that applies to them when they get bailouts, are declared 'too big to fail', and use other con games (to further rape the public).
Their fiat 'monetary' system is nothing but a means of mind control, a way to enslave the vast majority of humanity, who ignorantly go along with it.
I read Mr. Reisman. A wonderful 18th century analysis of a 21st century problem.
Get rid of scheming money lenders/banksters then their entrapping debt will go away. If debt could be clean and not covered with CDSs and BS deals then it would be much easier to manage as the players would drop down to lender vs. borrower.
Hopefully the current arousing climax the Greeks just felt will not be replaced by hungar pains. Greece is the head on the stick at the gates of the EU as a signal to the others pursuing a similiar course.
World leaders must get a grip on these crippling lending programs with the same intensity as chasing drug lords. caveat: if they care about people.
.
Have a conference to forgive all bankers...and start anew with same Keynesian shit?
That's exactly what he is advocating. No mention of debt based fiat money. Only the same Keynesian/socialist garbage that got every country into this mess in the first place. Moar inflation, higher taxes. I just summed up the entire article for you. Also, austerity bad. They should spend moar money. Where exactly does that money come from? Oh right, borrowed or printed into existence. Fuck this guy ZH shouldn't waste time with this establishment douche bag.
Back to PMs as money. It's harder to dig it out of the ground than to hit the print button.
Have a conference to forgive all bankers...and start anew with same Keynesian shit?
No; Hang them all (LYNCHING LAMPOSTS) Then we start over with State Banks owned by the citizens and funded by them. No CENTRAL BANKS. Really quite simple.
Oh yea, certain debt relief for the people--no corportations. Let them go down the toliet. Millestones
What would one expect from a kaiserhoff? That is German isnt it? Yah, Germans including Merkel, should shut mouth because they have a bad history of dealing with other peoples possessions, money and lives. This is one more piece of the "repayment of historic debt to the world." German legacy can't be simply forgotten because they think they are todays EU leader and all is forgiven.
Being Red does not automatically make them wrong. Or is political orientation a sufficient condition for error to occur? Like a reverse Midas Touch, everything a Red touches turns to scheiss, right?
Being Red does not automatically make them wrong. Or is political orientation a sufficient condition for error to occur? Like a reverse Midas Touch, everything a Red touches turns to scheiss, right?
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Do you even know what you are talking about? You dumbfuck.
I'm not familiar with Piketty's socialism or his fellating Keynes'n'Krugs, but his positions in this interview struck me as spot-on.
Except for this:
What he wants is MOAR central planning. He wants to undermine European democracy, but in his own way, not in the same way that the Eurocrats are today. He probably even has himself convinced that his solution is not undermining it, and that it is a democratic solution, despite the fact that it would inevetabily turn out to be technocratic. The problem is that most technocrats are either unknowledgable about the real problems, are out to benefit their friends, or both.
Exactly! More "wise men and women" from Brussels will solve everything. Sure.
Fair enough, thanks for pointing that out for me.
So, your alternative is centralized planning by central bankers, correct? How's that been working out so far?
That's the problem with propaganda. It always almost makes sense...especially if you accept their premise...that theft is good because there has always been theft, and who amongst is qualified to judge???
I say I am, as long as I work to feed myself and take nothing from others, and further reject his theme as all it does is seek to tax, to punish, to demean those who still actually do produce, rather than simply EAT.
A great line - very true...
"After his rimming of krugman on keynsian retardedness....hes a piece of shit."
Piketty is a French piece of shit, I'll be glad when the press quits giving him undeserved air time
Of course, you can continue any train of thought to its logical extreme ... Rome probably still owes somebody something from when they murdered Jesus.
Might be hard to research that one though. I think the Romans deleted their emails.
in line with this BS: "I can't punish my kids for smoking dope because I did" ????
I'm glad you think that way. Who's up for nuking Germany because of their Nazi history?
Perfect opportunity for Germany to grow some balls and throw off the US yoke...
Greece's problem is not its debt. With the right demographics and economy, their debt would be manageable.
Greece's problem is an unsustainable entitlement society built on an inverted demographic pyramid. Who is dumb enough to lend to a country where there is literally no future due to an impossibly low birth rate (1.3)?
Forgiving Greece's debt will accomplish nothing other than to ruin its creditors (who, granted, deserve to be ruined). Immediately thereafter, new debts will be run up until idiot creditors finally figure out that Greece is perpetually insolvent in every meaningful sense, regardless of the size of their debts at any moment in time.
Back of the envelope Greek demographic math - percentage of population that is working age (18-55) at current demographic trends:
0 yrs - 50%
5 years -49%
10 years - 48%
15 years - 47%
20 years - 47%
25 years - 46%
Percentage of population that is over age of 55 (retirement age for so-called "civil servants" in Greece)
0y - 32%; 5y - 33%; 10y - 35%; 15y - 36%; 20y - 37%; 25y - 39%
How exactly is this supposed to get better?
Nein..nein...nein
lol
Moar like...
https://www.youtube.com/watch?v=1MLry6Cn_D4
ridiculous
the truth is much simpler and even less easy to digest the first time: most sovereign debt does not get repaid, period
most sovereign debt is rolled over, kicked further and so on, until it's too much or a government embarks in a policy of balanced budgets for a generation or two
and this applied even more when gold was the currency of the world, and sovereigns defaulted more often
and that's it. the rest is propaganda, as in this one Piketty is engaging into
btw, the US federal gov was engaging into a "let's reduce debt campaign"... in the 50's. by simply balancing it's budget
but then Korea and other "domino theories" came, and then of course Vietnam, and then... Nixon made a decision
it's war that "does it", another little thing that gets forgotten so easily
I see you have a problem with this Piketty guy, want to elaborate?
I'm reading his book. I am forcing myself to read his book. I desperately want to have read his book, best yesterday or last year
perhaps I would stomach him more if his book was just downloadable into my brain, without all the pain it makes me suffer
I gather you did, and found it interesting. you might be stronger then me, then
No, I didn't, you're far more dedicated than me in that area, that's why I asked. ;-)
Right O...debt is control, it never goes away but wants to expand/increase/escalate/enlarge/swell/get bigger...
You are right Ghordius of course debt often does not get repaid and most of us in here are, for once at least, in agreement. But how do you then justify the hard stance of Mr. Schäuble towards Greece when, as has been shown by Wikileaks, even Chancellor Merkel knows that it won't get repaid?
Now, we both know why Germany does not want to admit that a hair-cut is needed but isn't that morally wrong and will eventually lead to the total desilusionment of most Europeans in the EU? Greeks showed it yesterday, they know that governments don't pay back debt. It seems only the German government wants to make its citizens believe that the money hasn't been lost already at this stage. A little fairy tale story for the tax payer to keep voting for the CDU.
That's what I call ridiculous!
it should have been 'default & restructure' from the beginning but there were too many cronies that would lose money if that happened... profits must be privatized and losses must be socialized, that's what passes for 'risk management' these days...
True, and 'socialism' on ZH.
It is a public drama played out for our benefit. Ask why Greece was lent the money in the first place. Does anyone have any shock or surprise at their default...a continued and on going default? And is there a reason why this has come to a head like it has? We know Greece's debt could be rolled into another "instrument" and not touched again for a hundred years. As has been stated...no debt has EVER been repaid by governments.
I believe it is being done to make a point and further to disparage the last remnants of sovereignty. Like we see in America, where insurance companies are evil blood suckers, but they can be absorbed into the collective insurance company (our government, who for a small fee will protect us from ALL potential threats) and its the best thing since sliced bread. States are permitted their sovereignty as long as it comports with the Federal government's edicts, and given the states dependency on the central government's largess for survival, the only sovereign rights left are the ones that can't be bought and they instead are removed by SCOTUS,
This is simple destruction with an end goal in mind...the further collectivization of the world...and it marches on. Many will see this a the potential end of the European Union, but look at who is saving all of the member asses right now through QE. Yes, many will resent them but they will still line up for their pittance as it is the only thing that is available without working for it. All you have to do is sell your soul.
This has nothing to do with the Greeks, FFS. It has everything to do with Portugal, Italy, Spain et alia. The Germans already realize Greece is a lost cause. They are trying to contain possible contagion.
... most sovereign debt does not get repaid, period
Yeah, that's the modern principle of "servitude" at work; debt servitude, that is. Quite a cleverly conceived cash cow: you get a long stream of interest for a loan originated out of thin air ! It's even better than it sounds, as the borrower (i.e. the government) is different than the payer (me, amongst many others). Of course, all sovereign debts are inherently unsecured; there is no "collateral" other than the full faith of the respective government in my capacity to pay taxes. Well, I don't quite feel like paying any money so that a bunch of fat cats will enjoy the good life at the very top of either the originating banks, or the engaging governments. If you like this system so much, then you pay for it... see how that works ! By the way, that's exactly why the modern Western societies will fall appart (but EU will do it before US...)
Fine example these banksters are setting for the kids from Q99X2.
Damn, Tyler dropping the big dirty balls right into Germany's teacup.
...scumbags
Arbeit Macht Frei ---
That's gonna leave a mark.
all puns intended
The apartheid supremacist shithole in Palestine is still sucking the German tit and doing very well from the hollow cost scam, if I may add.
Spot on. Can't believe the downvotes.
To be fair, look what happened when you demand payments from Germany... Creditors should be cautious!
Well, our US fascist corpocracy has produced a FINELY-TUNED tyrannical military industrial complex. Point those tanks, drones, bombers, and missiles @ Germany, and let's give 'em Hell, Middle East style.
Going for a hat-trick?
And the next one that has no intention of paying its debt is: the USA.
True, but intention is kind of irrelevant....
No nation has nor will they, it's just us plebes that are held at gun point.
According to the telegraph the new Greek finance minister will be much tougher than Europhile Varofakis, should be interesting.
The PM sacked Varofakis's (requested his resignation ... same thing).
I'm pretty sure that means the PM is Boss and can sack and replace any minister, and the new one will be subordinate to the Boss's policy and overall say so.
This was all gamed out some time ago. Why appoint someone who will be more Marxist than Varafoukis?
Same reason I expect, leverage major haircuts, plus more billions in support, so install a new stage prop for the theater. The show must go on.
I personally suspect Yanis got a better offer and needed to find a way out (for a few weeks now), hence why he began talking about quitting, well before the vote. The PM just gave him what he already wanted to occur.
After all, we only have Yanis's claim and word that others in the EU and "their associates", wanted him gone. BS I think.
How can interest exist in a finite world?
as long interest can be paid by the milk produced by the cow bought on debt (or in part on debt)... easily
the world might be finite, but the human and real economy usually grows
of course if you ask more interest then the cow can produce in milk... well, then you have... defaults
currency devaluation, btw, is just a form of default
i like that analogy although I despise interest as I refuse to believe it can exist. It has one sole purpose and that is to enslave another individual.
When human civilizations reach the limits of growth, as we have, they either pull back, or they crash. History is clear on this, and we're not pulling back. In our current economy, debt MUST increase, or M2 crashes and the ability to service the debt goes away. This requires real growth, which we are not getting.
Nicely said but they just keep on doing what your ZH name suggests to the people.
And people will continue to be herded, because contemplating the alternative is just too fucking scary for them. This will be so until enough feel personally abused that they stampede.
I agree buddy. And when it starts, it will not be pretty for anyone including us who are prepared.
Germany killed 26.6 million Soviets during WW II. That debt has never been repaid.
In 1993 a study by the Russian Academy of Sciences estimated total Soviet population losses due to the war at 26.6 million
During World War II, Nazi Germany engaged in deliberate extermination policies towards Soviet Union prisoners of war (POWs). This resulted in some 3.3 to 3.5 million deaths, about 60% of all Soviet POWs
https://en.wikipedia.org/wiki/World_War_II_casualties_of_the_Soviet_Unio...
https://en.wikipedia.org/wiki/German_mistreatment_of_Soviet_prisoners_of...
SALUTE ! to those tough Russians and Western military aid.
1. How did Germany capture millions of Soviet troops in the first weeks of the war if Russia was not preparing their own invasionof Europe? Well there is that little order that was uncovered a while ago that showed that Russia was going to invade Europe 17 days after the Germans beat them to it.
2. The allies freed millions of Russian troops from POW camps. The fact that they died before getting back to Russia had nothing to do with Germans. Stalin said there were no Russian POWs and he meant it.
3. What happened to the 3.5 million Germans who were prisoners of the Soviets? Only 20K went home, ten years after the war ended.
4. What happened to the millions of German soldiers and civilians in western camps after the war?
5. How come the casualty figure for Auschwitz was changed from 4 million dead Jews to 1.5 million but the overall total of 6 million did not drop in correlation
Be careful what you get from semi-official sources like Wiki. They might also tell you there were gas chambers where there were never any gas chambers. Remember the Soviets were backed by western bankers from beginning to end. These are the same bankers who funded Hitler and the western allies. They lent great sums of money to all the governments involved. Do you not think this entitled them to extreme leverage (which continues to this day)?
Very interesting read.
Bravo Piketty!!
What is a "star economist"?
An oxymoron
Funny. +1.
Shots fired! The Tylers must be enjoying the shit out of this show.
I'VE RUN OUT OF POPCORN!!!
No nation ever repays its debt. It either defaults, or it makes its slaves pay.
http://www.csmonitor.com/World/Europe/2010/1004/Germany-finishes-paying-...
Octy 4 2010
Germany finishes paying WWI reparations,Germany ends World War One reparations after 92 years with £59m final payment
Updated: 19:19 EST, 28 September 2010
“Germany will finally clear its First World War debt by repaying nearly £60million this weekend.
The £22billion reparations were set by the Allied victors – mostly Britain, France and America – as compensation and punishment for the 1914-18 war.
The reparations were set at the Treaty of Versailles on June 28, 1919, by the Allied victors - mostly Britain, France and America.”
http://www.dailymail.co.uk/news/article-1315869/Germany-end-World-War-On...
Germany owes Russia and the US nothing but gratitude for the post-WW2 period, including the green-light for reunification. Beggaring one's neighbor is nothing more than a prelude to war. Of all nations, Germany should know this.
I've never fully understood the tremendous national pride the Germans feel. Their recent history is hardly one to hold up as a paragon of goodness.
My assessment is that the Greeks were quite happy to sit in the wagon while others pulled. For some time now, it has required other countries to help it pull itself along. But of course it isn't Greece's fault. They are the victims. They didn't know that if you fail to reduce spending or raise taxes then you will need to borrow to maintain current spending (whether the currency is fiat or gold). They couldn't just expand the Greek central bank balance sheet themselves like the U.S does with the FED. They didn't know that there is no such thing as a free lunch.
Therefore, it is Germany's fault that Greeks like to avoid paying taxes. It is Spain's fault for Greece going bananas on the Athens 2004 Olympics. It is the IMF's fault that the public sector were retiring early. It is the ECB's fault that they were in trouble before they joined the Euro (hence why they needed the dodgy Goldman Sachs to 'cook the books'). It can't be Greece's fault. IT CAN'T BE GREECE'S FAULT. They are the protagonists, and the Troika are the antagonists. Varoufakis told me so. It's David vs Goliath. The 'poor' Greeks vs the 'evil' bankers.
It was all fraud you say. Fractional reserve banking and fraudulently induced loans. So, why did they borrow this toxic credit then? Riddle me that. Because the Euro enabled them to feel rich for a while. That sweet euro debt crack rushing through the blood. The oligarchs got what they wanted, and the peasantry were proud. Soon they would be hosting the Olympics.
OK. If part of the debt was fraudulently placed on Greece's balance sheet, then obviously that debt needs to be repudiated. Greece over-borrowed, the ECB, IMF, Germany etc, over-lent. Therefore, some form of restructuring of debt is in order. That would make sense. But the creditors are merciless, and the debtors are hopeless. Regardless of Greece fraudulently entering the Eurozone with the help of Goldman Sachs (which only put some eye drops in Greece's eyes, shaved its beard, gave it a shower, gave it some new clothes to wear), Greece was and still is an addict.
So I ask the question. What the fuck is Greece doing? If they can't find favorable terms with their creditors, pull the fuck out and go it alone. Rebuild from the ashes. But baby still needs its debt crack, right? Leave. You are an absurd appendage to the Eurozone. Set the precedent for the others that will be following you into the quagmire of debt. It's time to get rid of central banking, let the god damn market set the rate of interest. Banking isn't evil. Capital isn't evil. Being a retard isn't evil, but it doesn't help your economy.
And that's what I'd say to the people of Greece if I was their leader. Yeah right, I'd be hung from the nearest lampost, while the oligarchs looked on in laughter from their mansions.
That is an excellent recap of precisely what has happened thus far. Perhaps we should lecture Greece on how to live their lives -ya know, like we do- within our means.
Greece is kind of interesting. It's like an entree. But I'm really holding out for the main course, a larger economy to fail. I'm excited about the U.S. 4.5 trillion on the FED balance sheet, FED rate at 0-0.25%, the end of a bull bond market, over valued stock market, the end of USD hegemony. To be honest, I can't fucking wait. China's central bank is fighting the market too. Fuck there is some money to be made if you have the connect. So many idiots in the world.
If I throw someone a book on corruption, politics, money, banking, etc, and they don't read it and promptly go back to their comfortable little television induced bubble reality of illusion, 'should' I really care when they inevitably get thrown in the plastic crusher?
How about I write and scream and protest and plead and nobody gives a fuck? If people prefer ignorance, apathy, despondence, indifference, normalcy bias and cognitive dissonance, mental lethargy, logical fallacies, then they can have it. You can't cure stupid.
I call them Bloviating Naysayers. Call them out on their sh*t for starters. People who are accustomed to living in a fact free bubble, may stroke out on any challenge to their Faux world view. Get 'em out of the food chain. Ah, the Rapture! Can't wait for the relief inherent in that "Left Behind" moment.
A very strategically located addict.
Perhaps. Yet here we are today. The vast majority of the funds that Greece has received (and would receive if a bailout is agreed to) is used to pay back existing loans and interest. This debt is not owed to little old ladies retirement funds, it is owed to the ECB and the IMF. Both of these organizations can write off the debt without incurring real loses (similarly to what the FedRes did with the bank loses here in the US). Its a book keeping entry.
So what is the solution to the Greek (and the rest of the PIIGS) problem? It is clearly not austerity. Austerity will not work. More debt will only kick the can down the road.
The solution is the removal of the moral hazard that currently causes the debt to begin with. First, recognize that the PIIGS will not pay back the debt. Write it all off. I know it will never happen but, if you find yourself in this situation you can and probable will seek bankruptcy protection. Individuals and corporations do this on a regular basis, Greece, Portugal, Spain and Italy must do the same. Second, change the ECB charter and clearly specify that those countries that write off their debt will not receive any more credit. Just like an individual looses his credit rating when he goes bankrupt, the southern European countries should also have PUBLIC credit cut off. Make it clear, by changing the ECB charter, that banks and other institutions that lend to delinquent countries do so at their own risk and will not be able to transfer the debt to the central banks.
This solution would be painful for the ECB bankers at first but, it would remove the moral hazard. If Greece can not borrow more money from the ECB or IMF they sink or swim on their own. If a bank takes the risk on loaning money to Greece and then loose it, it sinks or swims on their own. Remove the moral hazard. No more socialized loses.
Oh, it is bizarre. Greek made the deal with the devil though. Might be time to end the addiction.
So you think the crack addict just became so by accident...stumbled onto a well meaning crack cook giving out free samples, never thinking a moment that it could ever lead to addiction or disaster of any kind.
This was all preordained. Nobody but an idiot would loan the Greeks this kind of money and still be shocked when they didn't pay, so ask why did the do it? Are we really going to stick with the idea that all these people are just idiots? We know why the Greeks did it...they are no different than most that will NEVER turn down something for nothing, like an overpriced home with zero down and a super low ARM. This is why there is so much sympathy for the Greeks. People see the same weakness in all of us. But that does not excuse it. It should give lesson, but it has yet to do so after thousands of years.
The EU leaders and bankers knew EXACTLY what would happen, so why the shock and dismay?
All this reminds me of Max Keiser's characterization of the TBTF US banks as "Suicide Bankers." You know.....bail me out or I will blow myself up.
There was a howl as if somebody had opened the door to the bad place when Long Term Capital Managment was quasi bailed out back in '98. Normal, rational, moral people screamed of moral hazard. They were right. We didn't hear a peep in '08 - a short ten years later - when the derivative fueled, global banking system imploded. The infection entered the wound of LTCM and spread virulently. If even Jesus was a banker, he would have been extending credit to Greece back in the '00s. We have totally corrupted ourselves.
So now comes Greece. Refinance me or I will blow myself up. Hey!!!! It worked for Lloyd Blankfein!!!!
Then lets bomb the Greeks to oblivion then give them a shovel forgive their debts.
The common denominator is always the same. Bankers, fiat/debt systems out of control and ridiculous amounts of leverage. This time around the whole fucking world is bankrupt wherein the lesser bankrupt countries are lecturing the greater bankrupt countries.
It's all quite ridiculous. Anyone ever see Germany's debt clock? http://www.nationaldebtclocks.org/debtclock/germany
Yeah, pretty sad picture LF.
However, Frau Merkel is repeating the mantra of Shauble, which is fundamentally an Austrian economics and conservative point of view. Namely, live within your means, and don't spend more then you can afford to borrow, or you are going to make a big mess, and lose control of your own affairs.
Essentially: Have an actual budget.
I don't know about you but I agree with that view, so I have a hard time seeing why the hell Germany is responsible for Greece. Greece is responsible for Greece's budget, and Germany is responsible for Germany's budget.
I suppose Shauble and Merkel have a lot to explain to Germans on that level.
However, did Germans not recently vote them back in?
So this is why I don't see why every one wants to apportion blame.
We are all using credit, publicly and privately, to buy real-resources and accruing debt we often can't pay back.
It is straight forwards greed, traditionally considered A DEADLY SIN.
We are all doing that, and we know we are doing that, and yet people in glass houses still want to throw stones at each other ... but all of them are doing the same thing.
Pot, meet Kettle.
Agree. We all whored ourselves out to the bankers long ago. Now we reap the rewards.
Oh wow we ae comparing Greece, a bankrupt nation by the former finmin's own words, to a country whose debt is among the safest in the world. And dont talk to me about past, that is useless. No one from Greeces past regimes is being taken to court, whereas in Germany they are prosecuting today a 92 year old SS man for crimes back in WWII. There is no Vergangenheitsbewaeltigung for the Greeks that ran their country into a bottomless pit of debt. So what do we do today? Forgive all debtors in the Euro Zone? Where does it stop and who will pay?
When the shit hits the fan, bond market investors abandon Greece's T-bill market in droves in favour of ten-year Bunds that give them next to zero return. So what's your point Piketty? the reason Greece has held its hands out for the past few years is because capital markets dont want to fund their government anymore! All these geniuses should make an example and invest in Greek debt, but i know they wont because they are hypocrites
Safe debt? Like military intelligence, jumbo shrimp, and government "work?"
Ever heard the phrase, "neither a lender or borrower be." That sir, is safe.
I will correct - "liquid debt", then, since you are right - at the end of the day this is all just being rolled over, never paid off
Your arguing apples verses oranges. Convict a 92 year old SS man who killed a Dutch resistance fighter! How many Palestinians in Gaza have the chosen ones killed? Some animals are more equal than others comes to mind.
The entire problem the world is experiencing is 'debt money' and arrogant financial banksters. At some point the debts will have to be forgiven or they will be defaulted on.... same difference.
And hopefully light poles and banksters will find each other.
I cannot believe how often and how touchingly you guys talk about corn-holing. I would have to guess that Zero Hedge is frequented by Farm-boys used to the pig squeal?
Do you have an issue with farmboys? Your great-granddaddy was one.
Don't do as ve do
Do as ve say!
I hope somebody who previously lived at the address Piketty currently resides at never had bad credit, because man, that reflects poorly on Piketty...
Oh man, I also hope his grandparents didn't have bad credit either!
With that double whammy Piketty is toast!
Subtle warrior's comment by a french communist who has chosen to live in California!
To bring to the surface the Germany of the 20's after almost 100 years is as ridiculous and shameful as showing Merkel in a nazi uniform. Brilliant comment by the Financial Times rewarded great economist!
http://hellstormdocumentary.com
@TYLER DURDEN -- as quite a few other commenters have already noted, there are dozens of newspaper stories from reputable newspapers (some of them left leaning) detailing Germany making its final WW1 reparations payment and/or making final payments to Israel for WW2 attrocities. Even the deadbeat Greeks complains that "everyone else got WW2 money, but not Greece" -- factually incorrect, but even the Greeks acknowledged that Germany DID pay its debts, just not the extra amounts that Greece hoped for.
Try and do a better job checking your facts, and spend less time parroting the stupidity of a French socialist loser.
But for some reason, Greece still pays for the enforced loan its government took while in German occupation during WW2. Hypocrite much?
There isn't one country on Earth that FULLY REPAYS all of 'its' debt. Governments spend (with no intention of ever repaying it in full) and tax for their own self-interest. These leftist-academics make me sick
Piketty's premise is ridiculous and an obvious obfuscation of the truth.
The bottom line is that there isn't a 'good side' in the context of the Greek debt situation. Greece put itself in this situation not unlike how the public unions in NJ have allowed themselves to operate on completely absurd expectations.
I use NJ as an example because there is fair symmetry: Those teachers expecting 90k a year once they hit 55, plus royal medical plans are in for a rude awakening. These promises were rooted in anything but reality and, even if the state attempts to raise income/property taxes even more, the savvy people will simply 'resettle' in TN, FL, etc. Further, people will increasingly classify their land under the Open Spaces protocol in order to skirt the completely obscene property tax system.
So, per Greece. I agree that the banks are using the opportunity to squeeze these lemons for lemonade (e.g., ultra-low discount property and business acquisition, a truly repugnant and cynical program.)
But, the Greek people have to reckon with reality. Their culture of easy cash and plum retirement has to change as they adopt their own currency, which they have no choice but to do.
The core of Thomas Piketty's philosophy in 8 words:
When you don't measure up, change the unit of measure.
I see that you count and comprehend much like our beloved SCOTUS.
Euros are created from thin air by a cartel backed with state violence. Some "measure".
.
.
More worthless moral (and fiscal) relativism from a non-surprising source.
I hope the jerk drowns in a freak ouzo-distillery explosion.
I firmly believe that the most stable and adaptive world is one that arranges itself in the smallest organizational units. That does not mean that in a distributed governance the greatest achievements will be made, only that it will be most difficult to destroy the entire world's population.
Small power means small risk.
This push toward globalism at any cost through debt-slavery does not have the best interest of the world's inhabitants at heart ... and I am sure those in power will agree. It does afford those in power the greatest amount of control over others ... and allows the controllers to live parasitically.
I can't wrap my head around the fact, that most of (if not all) western countries have a debt-to-gdp ratio over 100%. We live in a delusional society where nobody wants to see the truth, and the ones who care and try to tell it, often get slammed. I think we have a serious problem where there is no solution other than collapse. A global population which grows exponentionally while our resources become more and more scarce..
Wonder how long it takes before the boogie man shows up, and the music finally stops.
Meanwhile I see youtube vids where 'Murican people do not know from what country we declared independence from, or when the declaration of independence was written by whom. California? Abraham Lincoln? 1964?
Ow yeah and Piketty while I do not agree on your socialism, nice to see something other than shit is coming from your mouth :)
humorous.
zerohedges think the euro should do what? rescue greece? half of zerohedge believes the debt is illegitamate and so greece should leave the euro and start its own debt money bomb called a new fiat currency.
all modern states finance themselves on fiat, backed by the booty and treasure and labor of their captive people's we call a 'population' or 'citizenry', and the land/resource of the country itself.
so what? so germany doesn't pay its' debts. those debts were illegitimate to begin with. germany shouldn't pay its debts.
zerohedgers categorically reject 'debt' , let alone fiat. dear zerohedgers all history is a series of superior and inferior relationships, debtor and creditor. preceding fiat.
either you believe might makes right, or that VOLUNTARY agreements and behavioral CHOICES make right.
somewhere in between is the relitivism that philosophers and hippies like to discuss. it's a beautiful thing the grey zone. but there is very little of that grey zone in a meaningful judgement of history.
picketty is RIGHT . despite the fact he's a bullshit con shill that is saying the RIGHT THING because he wants the ECB to PRINT MORE MONEY.
it's a funny irony for someoen to be right not only for the wrong reasons but for the wrong purpose, to decieve.
I don't feel one bit sorry for any dipshit in the EU. It might have worked had every country had a clean debt slate and been forced to adhere to actual budgeting.
Instead, they have this steaming pile of shit and more blame than brains. The euro is toast. It never had a chance.
Pikitty, that slimy commie bastard. F*ck him.
Free (accoutable) markets and Free (accountable)people!! Anti-War, Anti-State, Free Markets. This guy has a lot to learn, Fuckin' technocratic asshole!!!
Please, can someone create a hitler dubbing video of german not paying debts.
https://www.youtube.com/watch?v=ZrHmcpRAZNs
One of the best discussion on German war reparations read Michael Hudson's, "Super Imperialism." Be advised this is not a sound bite and the book requires a lot of thought.
A simple solution would be for Germany to repay all its past debts (including Marshall Plan money) plus interest. Countries could use this windfall to help Greece pay off its debt, which would be fairly easy. More difficult but just as important, the European Union and the Euro should be dissolved.
You can't squeeze blood from a turnip.
German bankers made inadvisable loans to Greeks and the Greek Government, in such quantities that they will break in default.
The German government has explicitly chosen to support the dishonest and incompetent actions of German Bankers over supporting the dishonest and incompetent actions of the Greek Government.
Understandable, but not really the moral-high ground they'd like it to be.
In a fiat currency system, debts can NEVER be repaid. The amount of debt is always greater than the money supply since credit is created in our system. There are no limits with this system as nothing physcial backs the paper.
"In a fiat currency system, debts can NEVER be repaid"
Nixon closed the gold window.
When it comes down to it, there are 7 billion people on the planet and not enough gold to go around, to pay everyones debts.
Oh dear, here we go. Seems the evil Germans made payments of their war debts and reparations to the Allies of nothing into thin air up until October 2010 for the debts of WWI, after the debts of WWII had been settled partially at the London Conference in 1953 already and the rest, mainly to Israel, then Poland, Russia and the eastern European countries, then payed up until today and forthgoing.
Maybe Pikketty should start reading some reliable books or use the internet for reliable information instead of telling such an obscene amount of utter marxist bullshit.