[holoto]

The discussion over the last months was not about austerity - this was an 2014 topic - but about a plan for the future. The greek government did provide a plan without much detail, one you would not get any money from your bank for a house or any money - this is HN - from a VC. Greece hopes to get billions of $ based on some napkin calculations.

Reason is Greece does not want to commit to any foreign influence because it feels nationally threatened.

The IMF enforces a way by which it hopes to a.) get the money back it puts in b.) no need to put money back in 5y in the future. You could make this about money or investment, or you can make this about right-wing/left-wing.

[x0x0]

Well, it's created by relatively simple facts: a less productive periphery without the aid of a floating currency will require permanent subsidization by the more productive core or the end of the currency union. Now everyone has to pick.

[holoto]

Yes and hopefully Germany picks an Euro exit.

As is clear to anyone interested in the topic and listening to French government officials, binding Germany in the Euro was the price for reunification.

[euccastro]

Euro exit is the nuclear option that Germany wants to keep in order to maintain its hegemony within the Eurozone, but never wants to exercise. The Euro served nobody better than Germany. The day Germany starts facing competitive devaluations all across Europe, recession will be brutal.

[holoto]

@euccastro Yes life was miserable with the Deutsche Mark. Oops it was much better for most Germans. China is in trouble because it controls it's own export destiny through it's currency? I think not.

[euccastro]

Economic policy is not designed for the benefit of "most Germans". I can assure you that life became much better for "some Germans" in the years since the Deutsche Mark, as cheap labor from Eastern Europe drove costs down and profits up, while less competitive countries within the EU couldn't devaluate their currency to rebalance trade flows. Actually, it became so much better that they didn't know what to do with all those euros. So they poured showers of them into said less competitive countries, fostering all kinds of bubbles.

http://blog.mpettis.com/2015/02/syriza-and-the-french-indemn...

When said bubbles exploded, those "some Germans" were bailed out, in great part by money from "most Germans", whatever little could be squeezed from "most Greeks", and "most" people from all countries rich and poor. "Most Greeks" never saw any of that bailout money.

Alas, coming back to the Deutsche Mark will not bring back the good old times for "most Germans". Even if it did, it won't happen because "some Germans" are perfectly happy with the current situation and the power it gives them.

[taliesinb]

Exactly. More concisely put than I was able to!

[twobits]

Exactly. "For most germans". That's the truth. There is no germany, and no greece. You, a simple tax payers, me, a simple (greek) tax payer, all tax payers in europe, are paying for the german and french banks. Deutsche bank, for example, is not "most germans". Etc.

[euccastro]

Re: the French position wrt the Euro, you'd be surprised:

http://yanisvaroufakis.eu/2014/12/26/6265/

[taliesinb]

> The greek government did provide a plan without much detail, one you would not get any money from your bank for a house or any money

You've got it completely backwards: Greece is the equivalent of a person who desperately needs to declare bankruptcy, but is prevented by his creditors from doing so. Instead he is forced to borrow ever more money to pay off his old debts.

Eventually, no-one can pretend this is working anymore, so the creditor suggests he sell his house, his car, all his work implements. And if we take the analogy back a thousand years, even his children, himself.

"Debt peonage", it was called, and it has been incredibly common through human history.

Of course we abolished it in the developed world with things like bankruptcy laws, which acknowledge that no debt is absolute -- ability to pay matters, and the risk assumed by creditors has sometimes to result in losses.

But there is no equivalent international law for entire countries. Instead, the winners are the usual suspects -- the IMF, rich countries, American hedge funds. And the losers get 'structural adjustment': their infrastructure and natural resources sold off, their local industries subject to ahistorical competition, and their social safety nets shredded -- people actually die -- but of course the predatory loans are repaid.

Greece's Varoufakis proposed the only sane alternative: GDP-linked bonds, which ensure that the creditor and the debtor actually have their interests aligned, and Greece's payments can represent what they are actually humanly able to pay. That way it ends up mattering to Germany that Greece's economy has shrunk 25% -- how is that going to help them pay back?

Of course, that was totally ignored.

> Greece hopes to get billions of $ based on some napkin calculations.

No, let's keep the emphasis in the right place, so it is clear who is being unreasonable here: Greece needs short-term loans to pay back existing loans, and it needs that time so that it can put forward more detailed proposals that challenge the neoliberal austerity doctrine, which is really a convenient facade for deeper political strategems.

> Reason is Greece does not want to commit to any foreign influence because it feels nationally threatened.

Foreign influence? Is that a euphemism for when your national infrastructure is privatized and sold off to foreign companies, for when your pensioners resort to begging, for when hospitals shut down, your young people have 40% unemployment, etc? I mean, the active destruction and plunder of your country?

And the emphasis on foreign is misplaced: continued austerity will kindle yet more nationalistic, fascistic, racist, and xenophobic political movements across the continent. It stands to reason: inflict economic violence on entire nations and people within them become enraged and violent, although they direct their own violence against those even weaker and more disenfranchised.

I feel like I shouldn't have to point out that the second world war followed the debt crisis of a nation that was put under a completely unrealistic, punitive repayment regime.

> The IMF enforces a way by which it hopes to a.) get the money back it puts in b.) no need to put money back in 5y in the future. You could make this about money or investment, or you can make this about right-wing/left-wing.

There's a moral dimension, independent of politics. Should an international bank, whose shareholders are the very richest countries, profit at the expense of the ruination of a small nation that happens to be the actual seat of democracy?

[holoto]

In Germany many people live from going through garbage, you can see them everywhere in large cities. Kids from poor people need to be fed buy the Church. Pensions and social benefits were cut over the last decade, people need to work until 67 to get a pension, unemployment benefits do practically no longer exist in Germany. Germany has the lowest amount of house owners and private wealth.

But Germans should pay for Greece?

[euccastro]

No, German banks that made foolish investments should have taken the losses, so the German people wouldn't have to bail them out by proxy.

[taliesinb]

First, let's explode the idea of parity: German median income is almost twice that of Greece. Greeks work longer and have fewer holidays. The average age of Greek retirement is actually higher than Germany's. http://www.newstatesman.com/blogs/world-affairs/2012/05/expl... for more of the same.

So already the popular notion that hard-working Germans tax-payers are actually paying for those lazy, feckless Greeks is wrong. It also has nasty racist and fascist undertones, but let's put that aside.

Furthermore, it gets the causality backwards: the labor rollbacks and public cuts inflicted on German workers created the surplus that German banks speculatively invested in dubious Greek enterprises and Spanish construction projects in the 2000s.

Broadly, through the 2000s, Germany embraced neoliberalism, labour got squeezed, profits shot up, and a surplus accumulated. That surplus then needed a place to invest.

Those investments went to, among other dubious places, the (famously) fiscally irresponsible Greek government and corrupt Greek enterprises.

But investment isn't aid, of course. There's no gift. German banks were betting on a return when they loaded Greece and other countries up with debt. Of course a creditor nation also enjoys many political privileges over its debtors, so German politicians were happy, too.

Better yet, that same capital flow was being recycled back into German manufacturing by inflating demand for German exports from those countries! Living beyond their means often meant buying German goods! A giant circulation machine had formed that helped the Germany economy nearly double in 10 years.

In 2008, the slow slide of Italy, Spain, Greece, etc. into the status of 'debtor nations' was brought to a halt by the liquidity crisis. Everyone stopped fantasizing about endless debt-fueled growth. Germany banks and the ECB became more cautious. The circulation halted, and the Greek, Spanish, Italian economies, which distorted by malinvestment and terrible bubbles, collapsed.

Now we see the vulturism of austerity. You know, at one point in 2012 Germany actually proposed replacing the Greek budget and tax functions wholesale -- what else of a country's polity is left? That's economic occupation.

So, to sum up, we have the perverse situation where the banks which caused the crisis are being bailed out by the citizens of a country whose economy was wrecked by the same capital flows the banks mishandled! The Germans citizens aren't bailing out the Greeks citizens. The Greek citizens are bailing out the German banks that lent money to corrupt Greek politicians, by endlessly renewing all that toxic debt that rightly should be written off.

Of course, this should sound familiar, because it happened first in the US in 2008. Again, banks won, ordinary people paid dearly.

Beware the narrative about Germans paying for Greek mistakes. It's wrong, quite disgustingly wrong, and the truth is almost the exact opposite.

[twobits]

"But Germans should pay for Greece?"

There is no "germany" and no "greece". A german person, is not the deutsche bank. Likewise, a greek person, is not the greek national bank. "Germany vs greece", is just a simple "we vs them" plot, to hide the banks between the mass of the people.

What is happening is that ALL european tax payers, are essentially paying for the german and french banks.

[peterfirefly]

Or to really hammer the point home: Slovaks should pay for Greece? Estonians should pay for Greece?

That Greece's voting rights in the EU haven't been suspended yet is a travesty. I hope it will happen soon (and that Macedonia finally will be allowed to call itself Macedonia!) and that confiscations of Greek property to pay for the loans will follow.

Or maybe we could sell Greece back to the Turks? ;)

[taliesinb]

You seem quite happy with the idea of a country being sold, and its citizens denied the right of democracy, 2500 years after having invented it.

[peterfirefly]

The jurisdiction of the Greek government does not extend to Germany or Slovakia or Estonia. The Greek voters do not have a say in what the governments of those countries must do. The voters of Germany, Slovakia, and Estonia do. That's how democracy works.

(And your voting rights in the EU /can/ actually be suspended, quite legally. There are obligations you have to live up to -- and if you don't, you don't get to have a vote.)

[euccastro]

There is also an economic dimension: (a) and (b) are just impossible. There's no way Greece's debt can ever be repaid in full. All along, this farce has been about bailing out the foolish investments of private creditors (mainly German and French banks) at the expense of the taxpayers of all countries, mainly the "creditor" ones (because they are the ones that could foot the bill after all). The squeeze on the population of the "debtor" countries is mostly about ideology; from the perspective of the (new) creditors, it doesn't even make economic sense to push your debtors further into recession.

[holoto]

The US will also not pay back it's debt. This is not how it works. You do not pay off debt. You refinance debt with other debt. So this "There's no way Greece's debt can ever be repaid in full." is beside the point.

[euccastro]

OK. It's just as clear that Greece will not be able to indefinitely refinance its debt. As in, debt will perpetually grow beyond GDP. I don't think this is even controversial.

The US is an anomaly in that it has had the printing press for the world's reserve currency for more than forty years. Whether it'll be able to do so indefinitely is a different question.

Apropos this:

http://yanisvaroufakis.eu/books/the-global-minotaur/

[Paradigma11]

You forget that greece does not have to pay back any debt or interrest till 2020.

We are talking about additional money/debt here that greece wants.

I am pretty sure that it would be possible to negotiate a debt cut if greece can prove that they can get their shit together. They do seem to have other priorities at the moment, tough.

[taliesinb]

That's nonsense. It owes $500 million in a few weeks to IMF, and the obligations keep coming after that. They require continual renewal.

Without debt forgiveness or some kind of GDP-linked scheme, they will slide even further into debt over the next 5 years.

An analogous thing happened multiple times in Africa, too: kleptocrats took out wopping IMF loans for impractical infrastructure projects, stole most of the money, the infrastructure rots, and then over the next few decades the country would end up paying 3 or 4 times the original principal back to the rich Western creditors, having gained nothing, and often having to engage in those euphemistic "structural reforms" that actually end up killing people (you know, if your mosquito net budget goes to loan repayments instead, children die of malaria).

The situation with Greece is very close. The contrast between debtor and creditor is not as stark, but the dynamics are the same.

[Paradigma11]

The EU refinances greece debt with low interest loans (afaik 1%) with payments and interest starting in 2020. How could greece pay back their loans without a real primary surplus: http://blogs.wsj.com/brussels/2014/04/23/greek-primary-surpl...