At the end of WWII the US loanes European countries $13 billion (~$120 billion in today’s money) to European countries to help them rebuild and did something similar with Japan.
In 1953 we forgave half that debt to Germany and gave them generous repayment terms (IIRC they only finished repaying that in recent years).
So why is the Greek problem seemingly so intractable?
We saw what “sticking it to 'em” did post WWI which ultimately led us into WWII. I am not saying WWIII will start because of Greece but we already see a strong rise of fascist groups in Greece so why let it go there?
Who is this “we” of whom you speak, kimosabe? This is a problem created by Europe and Europe is rich enough to help itself, if need be. Still, there is the bit about moral hazard, too.
Greece owes more than triple that amount. Bailouts alone is almost twice the amount. It’s just not a problem which alone could be solved by throwing more money at it. Personally I think Greece’s problems should be solved by a debt writedown to around 50% GDP - but only after they have dealt sufficently with the trouble with corruption, clientism, adverse business climate, etc. Electing in quasi-communists just don’t seem to be the solution to further capitalism.
My WAG: cultural differences. Germany and Japan were always very driven cultures, driven to succeed and exceed other countries.
Greece? Not so much. One commentator that I was listening to yesterday on NPR said that Greece has a habit of making deals, accepting what the other side has to offer, and then not coming through on what they promised. Example: when they joined the EU one benefit was much lower interest rates. Instead of using that to build their economy, they used it to pad and re-pad government payrolls, and to mire themselves in debt. The hole they are in now is so deep that the only way out is massive gifts from other countries, but there is a lot of doubt whether anything would change in the way Greece does business, and they would be right back to the same place again. To my mind it is like trying to help an alcoholic - you can’t help them until they are willing to help themselves. Much of the rhetoric in Greece ignores what they did to themselves, and only focuses on those mean old international bankers, who loaned them all that money and now have the gall to expect at least some of it to be paid back someday. Half of Germany’s debt was forgiven, after 7 years of growth and development. Where is the growth or development in Greece from all the money that was lent to them?
Europe collectively is, on the whole, a helluva lot wealthier than the US was in 1945. I see nothing wrong with passing the hat around to EU members and have everyone chip in.
That said it need to erase 100% of the debt. Just enough to let Greece function again (reduce the debt and soften the repayment terms…devil is in the details but there are a lot of smart people working on this…I am sure they can figure something out).
I do agree that any bailout of this magnitude has to come with concessions. Not austerity but get things needed to get their economic house in order. Put that up for a referendum.
Nothing vague about it. I didn’t say what you thought I said.
I understand moral hazards just fine and it would be there if such a bailout came with no conditions and everyone told Greece to go back to business as usual. I suggest Greece would need to implement some serious reforms before they saw a single euro (i.e. not a promise to talk about it but pass some actual, agreed upon reforms).
I didn’t say I thought you said anything. I just said it was hard to tell exactly who you were asking to do the bailout, so I attempted to clarify. You may not think it was vague because you knew what you were thinking. I, OTOH, can only read what you write, not what’s in your mind.
We have, though. Even though it’s not really our problem (yet), we’ve actually ponied up quite a bit (over $10 billion…and this doesn’t count private investors, just the US government and Fed).
Easier to justify (to the voters) bail outs for rebuilding Europe or Japan after a major war than to float the Greeks until the next crisis (I’m talking about German and Norther European voters here btw) who don’t seem to keen and don’t seem to have much sympathy. Remember, though, that the Europeans HAVE bailed out Greece multiple times here already.
Well, this is a lot more money than that, for one thing, and it wasn’t due to a war, but instead due to the Greeks massively overusing their ability to borrow on the EZ/EU (read:Germany’s) credit card at low interest rates and systemic issues with the Greek system that don’t seem to be solvable, politically (like the fact that not many of the official taxes on the Greek books are actually collected in any sort of systematic way). It’s, again, easier to justify rebuilding a nation torn apart by war than one that has kind of brought this all on itself (at least that’s the perception, and there is at least some truth to it).
Yeah, and I think that IF there is some sort of agreement it will certainly involve at least some kind of ‘haircut’ as well as more generous (and realistic) repayment terms. The trouble is that, politically, many European countries voters aren’t going to go for it unless the Greek’s also make some serious concessions and show they are addressing their systemic issues so that this doesn’t happen again. It was much easier to get the American people to pony up those bucks to rebuild Europe since it had been torn apart by war and since there was a pretty big campaign to make folks in the US aware of the dire plight of the Europeans (and their children) who were starving. It’s harder to convey the pain of the average Greek to, say, German voters when the image is one of Greek’s relaxing on beaches and drinking wine while said German voters haven’t really seen a lot of increase in their own standard of living even with the country’s economic prosperity (due in large part to the incorporation of the former East Germany).
It’s political of course. In Greece there are serious issues that might not be solvable in the short term with their systemic issues. In Germany you have resentful voters and politicians who are also resentful and who want Greece to be more like them and do what they would and have done a la austerity (German style). There is a huge disconnect between the narratives both sides are looking at and ‘believe’, and both think THEY are right and the other side is evil or lazy or whatever. That makes for intractable situations with no easy solutions.
Actually this might push Greece more towards Russia as their last resort if things continue down this path. I don’t really see fascism as the driving force right now with a left wing socialist government in the drivers seat who just pushed through a major referendum. I also don’t think that similar dynamics are in play between a defeated Germany post WWI and Greece today leaving aside the fascism aspect.
What part of “they knowingly spent more than they could repay” needs to be explained?
It’s not just the debt, it’s the willingness to face the problem. Waving flags and telling the Germans to take their stable economy and shove it doesn’t help.
If (and a big if) I’m understanding things correctly, this is already about where things stand. Greece asking for better terms, Europe asking for reforms, Greece saying “the reforms are killing us,” repeat ad nauseam.
I am not fond of Neomarxists ( who in the Anglosphere, amusingly enough, became hard right Neoliberals, boosting Bush II, austerity and the Capitalist Way * ) or leftists at all; but it’s not as if the be-suited cookie-cutter, democratic, economic liberal, central casting issued, governing parties of the last few decades can offer much either. It was under their watch the Tragedy ensued.
Possibly also in France and Western Europe generally.
Like I said, it’s all about the competing narrative.