Why don't America & the EU help out Greece repay its debt, without adding more debt?

In My Humble Opinion
1

I understand that countries want to make money and that everything revolves around that, but in the case of the Greek bailouts it doesn’t make sense.

Greece received about 300 billion euros of help for its debt, except that it hasn’t. That is also debt, which a country already drowning in debt will need to repay for the next half of century. That’s assuming everything goes by plan, which it likely won’t. In the end everyone loses, creditor countries lose dozens and hundreds of billions that they gave and which they’ll not get back, while Greece keeps going under.

Greece has an extreme unemployment rate, taxes are high, bills are high, young people are leaving for Germany, properties are extremely expensive (and out of reach for an average person that makes 700$ a month) and parts of the capital Athens don’t have sewer systems. Even sidewalks for pedestrians are hard to find anywhere, except in the central parts of large cities.

Instead of burdening such a country with additional debt it’s obviously not going to repay (and losing money that way), wouldn’t it make more sense for NATO and EU countries to all chip in a tiny amount for 15, 20 years and repay the debt, in order to make their ally a stronger country, and get their money back indirectly that way?

When an earthquake hits or there is a flood, drought,etc, other countries provide non-refundable aid in order to help the country and that works, so why not do the same in case of extreme debt?

For example if Greece got it’s debt paid off and if it had a fresh start, it would be able to pay more for it’s military budget, meaning it’s part in total NATO spending would be higher and thus other NATO countries could spend a little less and save up that way, thus getting their money back.

Greece would also be able to buy more resources from other countries, more consumer products, more military equipment,etc., which would again mean that those countries would get their money back indirectly.

Maybe this a bit simplistic, but to me it makes far more sense, than to throw bailout money into an endless debt pit and to expect to get all of it back with an interest. Plus, the entire Greek debt is less than half of just one yearly American military budget, so if that was spread among almost 30 countries, over a period of 20 or so years, it wouldn’t be a big burden on anyone. Creditors would get their money indirectly, Greece would get a new start and it’s people would be able to live normal lives.

2

I’m no expert but didn’t Greece dig this whole themselves with really dumb economic policies?

Maybe the EU should help out, but why the US and NATO.

I’m not even sure why the EU should do any more.

If they got helped, would they fix all the unrealistic policies that got them here?

3

I’m not clear of what obligation the United States has in helping Greece pay down its debt; the European Union offered relief but with the condition of austerity measures which further throttled growth of the Greek economy, so that didn’t solve anything.

Greece certainly hasn’t done itself any favors but it is also drowning under the costs of government pension obligations while suffering from a diminishing workforce demographic. And pretty much the rest of Europe, much of Asia (especially Japan and China), and to a lesser extent the United States are all facing this issue. So we should probably figure out a way to deal with this problem.

Stranger

4

The roots of the problem are deep. If you can handle a book-length answer, I would recommend starting here:

It’s a memoir by a former Greek finance minister, who lays out the history in detail and shows how finance policy in the EU is largely defined by the big dogs in the French and German banking sectors. Their motivations are not for the greater public good, and anyone who proposes giving the bankers and high-rolling investors a haircut in the interest of long-term stability gets sabotaged and discarded.

It’s not as simple as just “paying off loans,” either. The book explains a number of mechanisms for restructuring national debt (not just for Greece, but also Spain and Portugal and so on) that would provide incentives for growth and sustainability, and then explains why the establishment bankers torched those proposals.

There are things to argue with in the book, but in general it’s an enlightening read.

5

I second the recommendation for the book and also submit this discussion between Varoufakis and Gilian Tett:

Stranger

6

Why the US and NATO? Because if they helped (which they can easily do over a long period), they would get a stronger military ally, stronger and more stable economical (Eurozone member) and geopolitical ally, which is pretty much the entire point of having an ally, instead of having the economically diseased ally drowning in debt like they have now.

Plus as I mentioned, Greece would be able to pay more for it’s share in NATO spending and it would buy more and more expensive equipment from US/NATO, giving back what it got.

Greece is responsible for a big part of the problem, but Germany and Italy were responsible for “a lot more” and yet they got direct non-refundable aid from America through the Marshall plan of around 25 billion dollars in todays money, not counting an additional 3 billion in loans.

Germany and Italy would recover either way sooner or later, but the aid they got surely didn’t backtrack them, it stabilized them and most importantly for the US, US got two strong allies, which they more than made up through their economies, trade with America and defence spending.

7

I enjoy reading books and articles by Michael Lewis, an American who often writes on financial matters in an entertaining and instructive way. Here is an 2010 article (probably paywalled) he wrote for Vanity Fair that goes into how screwed up the Greek economy was. One bit said, “In just the past decade the wage bill of the Greek public sector has doubled, in real terms—and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year.”

Somewhere else I read an article about how people tried to minimize real estate taxes. The example I remember was that few residents of Athens claim to have inground pools, but when aerial photos were compared against the tax records, there were a lot more pools in reality than claimed on the tax rolls.

8

Back during the Greek crisis, I searched through everything to try and find the place where the EU proposed “Austerity” and identified a German recommendation for measures that the Greek government should take.

In general the measures were:

  1. Cut corruption.
  2. Collect the taxes that people owe you.

There were a variety of smaller recommendations but I think that anything which one could claim to be austerity was more along the lines of cutting waste, not living an austere life.

So far as I can tell, the political impossibility of those two items above were so significant that Greece rejected them out of hand, went back to them with a proposal to be more austere, then went to the media and blamed Germany for the austerity measures.

9

Possibly the loans will eventually just be parked, - not serviced, but not written off either, like the WW1 debts have been.

10

Maybe the takeaway lesson here is, if you majorly screw up your own country, no money for you, but if you majorly screw up the whole continent and kill hundreds of millions, here’s a ton of money to rebuild

/tongue-in-cheek

11

On the other hand, if resolving the Greek financial crisis required “only” 25 billion in today’s money, it might be feasible. The problem is that about twenty or thirty times that amount is what’s needed.