Piketty: Germany Has Never Paid Its Debts

[Zanza]

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.

Using the German economy of 1945 in a relative comparison is retarded. The country was completely destroyed, the economy had collapsed to barter trade, and millions of Germans were working as prisoners of war in Allied countries. How is that situation even remotely comparable to Germany in 1955 or to Greece in 2015?

The London Debt Agreement was about reducing Germany's foreign debt of 30 billion Mark by 60%. 30 billion Mark was less than a sixth of German GDP of 1955, so the reduction was about 10% of German GDP. Greece's first haircut was about 11% of GDP according to Wikipedia. Greece is just in a much worse situation than Germany was after WW2 - thanks to the victors not putting  high reparations on Germany.

[The Brain]

Aw, we won Gulf War I.

Coalition war.  Doesn't count.

Then Vietnam was a loss by SEATO and cannot fall at our feet

I should have qualified my comment that GWI was a war with broad based international support.

And that was only because of our leadership and considerable effort. If it was not for us nobody would have done shit.

Actually, if it had not been for a well funded and very well orchestrated public relations blitz by the Kuwait elite (particularly within the US) nobody would have done anything. 

I once met Bob Gray.

Edit:  Crap, he's dead now. RIP http://www.nytimes.com/2014/04/25/us/robert-gray-a-powerhouse-in-washington-dies-at-92.html?_r=0

[crazy canuck]

Actually, if it had not been for a well funded and very well orchestrated public relations blitz by the Kuwait elite (particularly within the US) nobody would have done anything. 

Actually, if Iraq wouldn't have invaded nobody would have done anything.

Sure.  But the US doesn't exactly champion an international coalition every time one country invades another does it 

[Valmy]

Sure.  But the US doesn't exactly champion an international coalition every time one country invades another does it 

Because that would be insane. I mean we may not the smartest people around but nobody is that stupid.

[crazy canuck]

Sure.  But the US doesn't exactly champion an international coalition every time one country invades another does it 

Because that would be insane. I mean we may not the smartest people around but nobody is that stupid.

[Valmy]

Sure.  But the US doesn't exactly champion an international coalition every time one country invades another does it 

Because that would be insane. I mean we may not the smartest people around but nobody is that stupid.

So we should have created a massive coalition and forced the issue when Russia invaded Georgia?

[alfred russel]

We won Iraq War II, at least by any measure that evaluates war as a zero sum game with a winner and loser. If we didn't win, who did, Saddam Hussein?

War is profoundly negative sum, most wars leave everyone worse off, and they usually don't go as planned. If you only crown winners to wars when one side is made better off, then ever winning a war is a major accomplishment. Most will only have losers.

[Iormlund]

Picketty is right in that Germany is morally hypocritical, though. Especially when it comes to Greece (or any other country they plundered). It doesn't help that they have been proved wrong on pragmatic terms, as well.

That said, the Greeks are not exactly angels, either.

In any case, debt relief is necessary, but won't cut it either. Greece needs fundamental change. Not tweaks here and there. I still doubt change can come from the inside, since the only political alternatives for the establishment are the far right and the far left, neither of which will be very interested in opening up the economy to (Greek) outsiders.
The least painful course of action, I think, would be for Greece to get back to the Drachma while they sort their shit out. Have the ECB take over and monetize the amounts owed by Greece as of now. Greece gets a clean slate and the Eurozone can isolate itself from further troubles.

[Iormlund]

If we didn't win, who did, Saddam Hussein?

As of now? ISIL are the clear winners

[derspiess]

Was Panama a war?  More of a snatch and grab wasn't it?

Most of our wars these days start out that way. That one just stuck.

'Don't worry this will be just a quick little operation using a few advisors/special forces/airstrikes and...OMG WTF'

"Daddy, what was Grenada?"

[Valmy]

We won Iraq War II, at least by any measure that evaluates war as a zero sum game with a winner and loser. If we didn't win, who did, Saddam Hussein?

Well let's just say Bush and Blair established some pretty unrealistic victory conditions going in.

[Valmy]

If we didn't win, who did, Saddam Hussein?

As of now? ISIL are the clear winners

Well in that case the war is not over, it has just begun.

[Valmy]

In any case, debt relief is necessary, but won't cut it either. Greece needs fundamental change. Not tweaks here and there. I still doubt change can come from the inside, since the only political alternatives for the establishment are the far right and the far left, neither of which will be very interested in opening up the economy to (Greek) outsiders.
The least painful course of action, I think, would be for Greece to get back to the Drachma while they sort their shit out. Have the ECB take over and monetize the amounts owed by Greece as of now. Greece gets a clean slate and the Eurozone can isolate itself from further troubles.

Well that is the thing. Germany is acting out of political considerations for the EU confederation, which is why most of the other countries are going along with them. This is not about economics since the amounts of money we are talking about are small-ish.

[Iormlund]

In any case, debt relief is necessary, but won't cut it either. Greece needs fundamental change. Not tweaks here and there. I still doubt change can come from the inside, since the only political alternatives for the establishment are the far right and the far left, neither of which will be very interested in opening up the economy to (Greek) outsiders.
The least painful course of action, I think, would be for Greece to get back to the Drachma while they sort their shit out. Have the ECB take over and monetize the amounts owed by Greece as of now. Greece gets a clean slate and the Eurozone can isolate itself from further troubles.

Well that is the thing. Germany is acting out of political considerations for the EU confederation, which is why most of the other countries are going along with them. This is not about economics since the amounts of money we are talking about are small-ish.

I think the German government has been (mis)guided mostly by morality, actually. Which is why Piketty has a point.

But it's silly to focus on them in this case. I'd wager the most recalcitrant hard-liners when it comes to current events are Rajoy and Co. Anything that makes "alternative" governments like Syriza look good puts their position in peril, not to mention all the money loaned to Greece.

[crazy canuck]

Sure.  But the US doesn't exactly champion an international coalition every time one country invades another does it 

Because that would be insane. I mean we may not the smartest people around but nobody is that stupid.

So we should have created a massive coalition and forced the issue when Russia invaded Georgia?

No, the point is the smartest people around should not have failed so miserably in choosing the wars that they did fight.  That's right GWII I am looking at you.