
Thomas Piketty: “Germany has never repaid.” - Thevet
https://medium.com/@gavinschalliol/thomas-piketty-germany-has-never-repaid-7b5e7add6fff
======
HSO
At the risk of being a moralizing bore, may I remind everybody that "Germany",
"Greece" etc. are not people, and that people are not countries? I am
surprised by the national coloring, however faint, of some comments here and
there
[https://news.ycombinator.com/item?id=9834721](https://news.ycombinator.com/item?id=9834721).
"I am a German" or "Greek here" should have no relevance to the ideas put
forth. "Your money" and "your banks" are not really "my money" and "my banks"
once I have paid the tax and don't own the bank!

The theory of complex systems reminds us that aggregates can have properties
that are not traceable to any individuals themselves. Game theory tells us
that incentives and constraints can get so messed up that developments take on
an eigendynamic which was nobody's intent nor interest.

Please, be civilized and don't let yourselves be infected by nationalistic
passions.

Your moralizing nanny...

(No seriously, I am starting to get concerned.)

~~~
luso_brazilian
OK, I'll try to shed some light on why this subject tends to inflame some of
the europeans nationalistic sentiment with a concrete example:

1\. Meet Portugal (my country). Some may know us derisively as the P in PIGS
because of our financial problems (much similar to the Greek one in nature and
extent).

In 2010 and 2011 as one of the 14 member states of the EU that were part of
the Greek loan facility Portugal contributed with _1102 million euros_ into
the 52.9 billion loan that greece received [1].

Yes, that's correct, not all of the debt that people are so eager to expect
that German forgives is from their coffers, it was actually pooled from the
following countries: Belgium, Cyprus, Germany, Estonia, Finland, France,
Ireland, Italy, Luxembourg, Malta, Netherlands, Austria, Portugal, Slovenia,
Slovakia and Spain.

2\. As you may know, about the same time we had our own problems and also had
to be bailed out. As part of the measures put in place to reduce our deficit a
massive tax hike was implemented in the end of 2012 [2]

I'll draw attention to single one of those measures: the 3.5% extraordinary
tax on the income paid by every single person with income above minimum wage
(485€/month) including pensioners.

Now, for the money quote [3]: "Minister of Finance Vitor Gaspar said the tax
would bring in 1025 million euros".

Less than what Portugal contributed to the Greek bailout fund. 3.5% of the
income of every citizen in this country.

In conclusion, that's one of the reasons for the nationalistic outrage against
Greece defaulting the loan. It is not only the money of the richest bankers of
Europe that won't be repaid, it is the taxpayer money of each of those
countries that contributed to their rescue.

To put in perspective, 1102 million euros means that default would cost every
inhabitant in this country 110 euros (about 330€ per household) and not only
hypothetically but in practice too as demonstrated above.

EDIT: Changed second link as it was paywalled for the same news, but on CNN

[1]
[http://www.rekenkamer.nl/english/Publications/Topics/EU_gove...](http://www.rekenkamer.nl/english/Publications/Topics/EU_governance_to_combat_the_economic_and_financial_crisis/Financial_stability_instruments/Financial_instruments/Greek_loan_facility)

[2] [http://edition.cnn.com/2012/12/31/business/portugal-
fiscal-t...](http://edition.cnn.com/2012/12/31/business/portugal-fiscal-tax-
increase/)

[3]
[http://www.eurofound.europa.eu/observatories/eurwork/article...](http://www.eurofound.europa.eu/observatories/eurwork/articles/other/governments-
first-bill-taxes-christmas-allowance)

~~~
toyg
The problem with "your money" (as well as Belgium's etc etc etc) is that it
didn't "go to Greece": it went to _private lenders_ , aka French and German
banks which were holding Greek debt. The honest people of Portugal were
_swindled_ out of their money, in the tradition of socializing private losses
(while privatizing profits wherever possible).

So I would suggest you redirect your complaints towards the real responsible
parties: European bankers and the elites who keep enabling them. Portugal
would benefit from getting together with other countries and ask for their
money back from the (mostly German and French) financial sector, or at least a
big haircut. This is also true of Italy, Spain, Ireland and so on.

~~~
claudius
> The problem with "your money" (as well as Belgium's etc etc etc) is that it
> didn't "go to Greece": it went to private lenders, aka French and German
> banks which were holding Greek debt. The honest people of Portugal were
> swindled out of their money, in the tradition of socializing private losses
> (while privatizing profits wherever possible).

Can I borrow 100€ from you to pay back this other guy from whom I borrowed
100€ which I then spent on alcohol? Yes please? Okay, thanks, now
unfortunately you didn’t actually give me any money and it’s not my fault if I
can’t pay you back because _actually_ your money went to this other guy. It
had nothing to do with me or those empty bottles you see back there, it really
went directly to this evil person OVER THERE AND YOU SHOULD ONLY TAKE IT UP
WITH HIM!

In other words, the money of course did go to Greece, it’s just that Greece
was so far in debt by this point that they couldn’t decide for themselves on
how to spend it because they first had to pay back other people. On the other
hand, there is still plenty of private property in Greece so the country
itself is far from bankrupt. It’s just the people deciding they would rather
default on their loans and continue living than to tax the rich and wealthy.

~~~
x0x0
so to recap, it's totally true that the first bailout didn't aid Greece but
rather bailed out dodgy German, et al, bank loans to Greece by transferring
them to the Greek public sector?

I'm not sure why you fervently believe the banks deserve this. No-one held a
gun to their head and forced them to make a loan to Greece, and it's not as if
the, ah, looseness of Greek gdp calculations was exactly a secret.

Perhaps consider being pissed at the bankers that swindled all the
aforementioned taxpayers into buying out their bad loans. A cynic might think
this is how European government disguised the rather unpopular act of writing
their banks a huge-ass check.

~~~
claudius
Sorry, but in which way did Greece not get some 300 billion euros? Whether
they first borrowed that money from private banks and then the rest of the
eurozone paid back the banks for Greece or whether they received the money
directly from the other eurozone countries, the end result is still that banks
now have roughly as much as before (modulo minor interests etc.), Greece has
some 300 billion more and the rest of the eurozone has some 300 billion less.

~~~
ZeroGravitas
As well as ignoring the banks culpability here, you're doing the same thing
the original starter of this thread wanted to point out. Greece is a country,
not a person. Did all Greeks benefit equally from that money? Or is large
amounts of it sitting in accounts of corrupt politicians and the corporations
(not necessarily Greek ones) that the money got spent on.

I've seen accusations that the high military spending goes to northern
European arms dealing countries. I have no idea if that's true but the pattern
is very familiar, the UK have a long history of giving "foreign" "aid" which
is basically giving taxpayer money to arms dealers.

~~~
Djeman
Wait a minute. Isn't Greece a democracy with government responsible to
citizens? Greece gov has been spending for decades on military and no one
argued with that while credit cards worked.

~~~
ZeroGravitas
That's a good question, is it? Are any other modern countries?

One of the things people have been laughing at the Greeks for is that they
don't even have a Cadastre listing who owns what land. Apparently this is
proof the Greeks are all lazy, tax-avoiding thieves. In Scotland they're
trying to achieve the same thing as they only know who owns about a quarter of
the country.

Unfortunately the very rich aristocrats who own this land have been trying to
prevent it since apparently knowing who owns land is some dark secret they're
worried about getting out. They've been writing articles, such as the one by
the UK prime minister's father-in-law Lord Astor, comparing this compiling of
a list of ownership to the behaviour of Mugabe in Zimbabwe.

So, are we living in democracies with government responsible to citizens? I'd
say to a great degree we don't, and like many soldiers who fought in European
wars last century I think it becomes clear that you have more in common with
the ordinary people of other European nations than you do with the ones
guiding you into wars, or continuations of the same via diplomacy or economic
shock doctrines.

~~~
Djeman
Of course it is a proof the Greeks are lazy, tax-avoiding thieves. They don't
care about Cadastre. They're on the streets for their comfy government jobs
and social benefits.

Please don't sell me that socialist BS. I live in ex-socialist country and
there is always trash talk about elites, aristocrats and capitalism on our
long coffee breaks but guess what? You know what those people cry for?
Socialist dictators and God-All-Mighty state.

Grow up. It is your fault mostly.

~~~
ZeroGravitas
You can be socialist and selfish and still be in favour of a Cadastre, since
you personally are unlikely to own the land. Lazy, selfish people _should_
support knowing who owns all the land, because that tells you who to tax
efficiently via a Land Value Tax. Unless they are lazy, selfish people who
already know who own the land, because it's them that owns it. Which brings us
back to powerful elites, which you think don't exist for some reason. Your ex-
socialist state must have been an extreme outlier both then and now if it
doesn't have them.

~~~
Djeman
I'm not saying that Greeks are not in favour of a Cadastre. They probably
think it is a great idea. Only problem is they are too lazy to implement it
and too selfish to give power to non-lazy people who might then make them
work.

Elites exist, it is not a mystery cloaked in enigma. Most of people on Earth
could say I'm part of elite just for being European. But you are talking about
powerful elites who work in mysterious ways to control all Greek people votes.

------
sgnelson
This makes me lose respect for Piketty. There's a very clear difference
between a country that comes out of two world wars, with everything all but
destroyed, including millions dead. I'm sorry, no matter how bad 2008 was, it
was no World War. His inability to grasp this just boggles the mind.

There's a very big difference between war caused debt and economic caused debt
(note that I'm basically making these two "debts" up, and things are more
nuanced obviously, but I'm going to ignore the nuances for now, these are very
broad strokes.) When you come out of war, you're either the loser or the
victor (one way or another, there are very few true "ties" in war.) And while
capital may be destroyed in both cases, an economic crises doesn't necessarily
leave your physical infrastructure and entire social system completely
unrecognizable.

Further, Piketty seemingly completely ignores the Marshall Plan and all that
it included in rebuilding Europe. And yes the Marshall plan was a form of debt
forgiveness, but as a huge portion of the European continent was a smoking
crater, things were different in 1945 than Greece in 2015.

Further, some historians/economists will argue that the "German miracle" (and
"Japanese miracle" as well) were in part because of the destruction cased by
the wars. With all the manufacturing capabilities destroyed, they were able to
rebuild with the latest and greatest technology of the time. (and if you take
this further, as the US was able to rest on it's un-destroyed capital
equipment and make huge profits during the rest of the 1940's, 50's and early
60's, and never re-invested as Germany and Japan were forced too, this
eventually lead to the downfall of the US Industrial might, in part.)

Personally, I think this has more to do with his French nationalism than
anything else, at least as it appears to me in the interview.

~~~
jsprogrammer
>There's a very clear difference between a country that comes out of two world
wars, with everything all but destroyed, including millions dead.

Which allows us to provide a further distinction: the country who had
everything destroyed was directly responsible for that destruction. Yet, the
debt that they racked up because they tried to take over eurasia while killing
and torturing millions in the process, was forgiven not many years after the
killings and torturings took place.

I think there _should_ be a distinction between a country that kills and
tortures millions and one that does not. So, why again should we forgive the
debts of those responsible for killing and torturing millions, but not those
of a country who has done nothing comparable?

~~~
sgnelson
I'll put it this way.

World War I: Germany loses, is forced to pay not just debt, but reparations.
Huge economic and political instability as a result leads to a new leadership
which leads directly to World War II.

World War II: Germany loses, is split up, due to the Marshall plan (in part do
to a fear of Communism, so not solely due to compassion), West Germany given
millions of dollars to rebuild, a rather thriving democracy and economy is
created as a result.

Which of these is the better option?

~~~
TheCondor
West Germany did repay some of the defaulted WWI debt to help rebuild their
reputation after they lost WWII.

Also, there is another gigantic difference here, Germany lost a bloody war and
we told them how it was going to be, we restructured their economy, wholesale,
and they were in no position to disagree. About half the debt was forgiven
because they did what we made them do. If Greece wants to put their
sovereignty on the table and let their creditors structure their economy for
them, that's a very different negotiation than what they've had. Further, the
west wanted a strong Germany between them and the communists, what's Greece
got to bring to that table?

All this hypocrisy talk misses the point. Greece should go elsewhere to
finance their debts if they don't like dealing with Germany. With their
history, lifestyle, economy and government, I think that will be a challenge.
Nothing prevents BRICs from investing there, they just don't seem that
interested. Nations aren't individuals but try to go negotiate with a pawn
shop or payday lending place, it sucks to need money and not have options.
Sure, Germany has defaulted in the past, Greece can crap on then when the
tables are reversed...

~~~
afarrell
> the west wanted a strong Germany between them and the communists, what's
> Greece got to bring to that table?

Continued loyalty to NATO and the EU?
[http://www.reuters.com/article/2015/07/03/eurozone-greece-
ru...](http://www.reuters.com/article/2015/07/03/eurozone-greece-russia-
idUSL8N0ZH3LP20150703)

~~~
mercurial
Strangely enough, that's exactly what Piketty was talking about in a recent
interview with the digital edition of Le Monde. "Let's just kick Greece out of
the eurozone" people have no idea of what they're doing.

------
netcan
It actually reads to me that he is saying something quite similar to what I
have been thinking recently: countries go bankrupt, we need a bankruptcy
court/procedure for governments.

The US needs it for its bankrupt local governments. The EU needs it for member
states.

The rationale behind bankruptcy is this: if a borrower cannot repay their
debts in full, the lender cannot receive them in full. This isn't negotiable.
It's an artefact of reality. Given that the lender will not receive their
payment in full, it makes sense we may as well have a process that
acknowledges this fact and moves things forward. There is no point to debtors
prisons. Debt means risk and if bankruptcy happens, that risk plays out.

The current Greek situation is exactly that. The troika cannot receive its
repayments in full. Greece simply cannot repay them. It's not marginal. It's
not possible if only Greece would... It's not going to happen. They owe too
much and their economy is in collapse. It is game over for these loans.

~~~
Spooky23
Sovereigns don't need bankruptcy protection, they just stop paying.

Somebody will always lend money to states, even poorly managed states. At the
end of the day, three people with the most to lose are the richer countries of
the world, because they are also in debt, and a sovereign default will screw
up all of the debt models.

In the U.S., there is municipal bankruptcy. U.S. States cannot go bankrupt,
which will be interesting when states run as poorly as Greece (ie Illinois)
get hit by a tidal wave of retirement obligations.

------
sdenton4
This all reminds me of what we've learned about forest management. You see,
for a long time we thought that all forest fires were bad, and set out to
extinguish fires whenever even a small one broke out in a forest. After a few
decades of almost no fire, a huge amount of burnable debris collected in the
forests, and now, when fires break out, they're gigantic and far, far more
damaging than normal forest fires.

Likewise, central banks have been working very hard to keep interest rates
near zero. Any interest is perceived to be a bad thing (the big piles of money
held by the large private interests become relatively smaller under
inflation), and has thus been held in check. Normally, when things go somewhat
badly for a country, they can issue a bunch of bonds and inflate their
currency a bit to take up the flack. But with the Euro, there's no opportunity
for member countries to inflate their own currencies to smooth out the bumps,
and strong pressure from the overall Eurozone to keep interest rates low. The
normal control mechanisms are suppressed, leading to bigger explosions when
things go really wrong...

~~~
JamesBarney
Hey sdenton,

I agree with a lot of what you say about how Greece needs it's own currency to
inflate, but sometimes I don't know if someone has a non-mainstream opinion or
just needs a little help with consensus economics. So if you are like me a
student of economics this post will hopefully help clear some things up. If
not then I guess we disagree and the next person to read this post will have a
better understanding of the different views of monetary policy present in
economics :).

The consensus view in economics about issuing bonds is that it moves the
needle away from inflation and towards deflation. Think of money in a very
simple supply and demand model. More (supply)money means it is worth less.
When the government issues bonds it auctions them off and takes money from
people(out of circulation) in return, reducing the supply of money. This leads
to less money, which is worth more(deflation, or disinflation).

The consensus view about lowering interest rates is that it leads to
inflation. Imagine a country with a long term interest rate of 10%, then the
FED turns the dial down to 0%. Vick the VC, previously had to average 10%+ on
all of his start up investments because investors would move their money to
banks(and make 10%) if he made less. So Vick previously only invested in the
best start ups, all ex-googlers and previous entrepreneurs. But now he only
needs to break 0%, so he invests in all the maybes. This leads to more start
ups and more dev positions. Now if we go back to supply and demand, more
openings(demand) means greater price. This same things happens across the
entire economy. Many projects/start ups/buildings get funded that weren't
before because of the drop in interest rate. And these projects create
openings, leading to higher wages. Since labor composes most of the goods and
services we consume, when we pay more labor, we pay more for good and services
call it inflation.

~~~
mike_hearn
_> When the government issues bonds it auctions them off and takes money from
people(out of circulation) in return, reducing the supply of money._

Where did you get that idea? Governments usually borrow money so they can
spend it. That money isn't deleted or burned, it heads right back out of the
government into the economy.

------
interesting_att
Everyone here seems to be criticizing Piketty for weird reasons. He is not
saying post-war Germany's debt is the exact same thing as the current Greek
crisis. Pointing out parallels isn't same thing as saying two situations are
equivalent.

His point is that this isn't a "moral" decision between two peoples. It's an
economic decision between nations.

~~~
csallen
Thank you. When a specific comparison is made between two things, people are
too quick to emotionally point out the obvious and irrelevant fact that some
differences exist, too.

~~~
shrikant
..especially when he's specifically expanded on that point in the same
article. In a situation that certainly warrants more nuance than can be
conveyed in a Tweet-sized headline, the supposedly "enlightened" HN crowd
should really RTFA.

------
chernevik
This is just stupid. The German regime that racked up the WWII debts was
destroyed and its leaders suicided or executed. The entire country was split
in half by the war. The regime in power when those debts were rescheduled was
a completely different entity. And Greece enjoyed similar, if not
proportionately greater, economic support at exactly the same time. The
Marshall Plan started in Greece, after all.

And there are enormous differences in the uses of the new debt capacity.
Germany used the capacity to rebuild its economic capacity. Greece would use
its new capacity to fund further welfare transfers and tax dodgers. Germany
did not use the new capacity to repeat the same mistakes that created the old
debt (and the vastly more important war). Greece would continue the exact same
policies, and arrive at the same point of demanding debt concessions.

~~~
deciplex
> _The German regime that racked up the WWII debts was destroyed and its
> leaders suicided or executed._

Yes, but most of the people who enabled that regime to do its work, were still
around. It's not as though the entire population of Germany was swapped out
for a different one, after the war. The average German was not a murdering
genocidal maniac, but he did fall under the sway of idiotic fascism, and while
it would have served no one's interest to force him to pay the price, there is
nothing wrong with pointing out that he did not, in fact, pay the price.

> _Greece would use its new capacity to fund further welfare transfers and tax
> dodgers._

Let's talk about those tax dodgers, then. You make it sound as though the
Greek government has some sort of policy in place where they encourage people
not to pay their taxes. Rather, the Eurozone is set up in such a way that it
is very easy for the rich to avoid paying taxes by putting all their asset in
tax havens e.g. Luxembourg and with very little oversight. And the wealthier
nations in the EU tend to support this status quo, not the poorer ones.

~~~
shin_lao
There is a difference between having tax loopholes and being a state that
doesn't collect taxes properly and where tax avoidance and black work is
everywhere.

Greece is the latter. Having been in Greece several times, it is very
unsettling to being issued fake bills _all the time_ for _everything_.

A famous example is the swimming pool tax avoidance:

[http://www.zerohedge.com/article/greek-tax-
avoidance-101-cov...](http://www.zerohedge.com/article/greek-tax-
avoidance-101-cover-your-swimming-pool-tarp-fool-satellite)

Some more information:

[http://uk.businessinsider.com/this-is-the-real-reason-
greece...](http://uk.businessinsider.com/this-is-the-real-reason-greece-has-a-
massive-tax-evasion-problem-2015-2?r=US)

~~~
ubernostrum
Without knowing anything about the details of it, I am immediately suspicious
of the truth of the swimming-pool allegation simply because of how universally
it is mentioned in discussions of Greece's economic situation. Anything which
gets used that ubiquitously, in my experience, ends up debunked on Snopes or
Politifact sooner or later.

------
obblekk
There's one way in which Picketty is right: it's impossible to force a country
to repay their debt.

After WW1 France tried first through international (England) enforcement
bodies, and then ultimately by _occupation_ of the Ruhr valley (Germany's most
productive region then).

Both approaches failed. Eventually the Weimar inflated their currency until
the French debt was worth nothing, workers in the Ruhr valley striked, and
extremist political parties promising a return of German dignity flourished.

Once the Greeks decide to refuse to pay, there isn't a good way to force them,
short of enslavement.

~~~
caskance
If you are willing to accept payment in land, it's quite easy.

~~~
cwp
You also have to be willing to kill all the people currently living on it.

~~~
caskance
No, they're a pack-in deal.

------
felipeerias
That argument gets thrown around a lot, but it is quite a terrible one.

After WW2, the only Germany which acknowledged war and pre-war debts was the
FDR. This was a state in ruins under foreign military occupation, with about
half the territory and population of the former German state that had incurred
those debts.

If post-war Germany is your standard for debt relief, then Greece is still
very, very far away from qualifying.

~~~
ubernostrum
_This was a state in ruins under foreign military occupation, with about half
the territory and population of the former German state that had incurred
those debts._

OK. So, the Greek government officials who ran up Greece's debt are
responsible for that debt. The current government isn't, and in fact the
current Greece is in economic ruin courtesy of years of "austerity" imposed
forcefully by foreign powers.

------
Mikeb85
This can't be upvoted enough.

It's also ironic that Greece was one of the creditors that forgave a large
amount of German debt.

~~~
tomp
Not only that, but Greece was the country that suffered the second most after
WWII (in terms of GDP loss, not human life loss), at least according to this
article (point 5)

[http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/05/7...](http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/05/7-key-
things-to-know-about-greeces-debt-crisis/)

------
tjradcliffe
Lecturing Germany on its own history is just about the most useless
contribution to this debate possible.

Germany and everyone else who foolishly loaned Greece money in 2010--and
before--wants to get paid. There is nothing wrong with that. Dredging up the
irrelevant past? Not so much.

Or: if I owe someone money, it doesn't matter if they are a nice person or
not. I still owe them money, and must suffer the legal consequences if I fail
to pay. This is what the rule of law is all about. It protects everyone, even
people who are not nice. Even people who are hyopcrites. Even people who are
_Germans_.

This moralization is childish. By all means dismiss the German government's
moralization as silly and irrelevant. But don't engage in far more silly and
far less relevant moral hectoring of your own.

~~~
vidarh
He's not engaging in moralising. The entire point is that while there's
nothing wrong with _wanting_ to get paid, it's entirely irrational to try to
force payment no matter the consequences. _Especially_ when both historical
examples of similar steps _and_ numbers from the last few years in Greece
demonstrates that such a policy is likely to make matters worse, not better,
not just for Greece but for the creditors as well.

------
nostromo
It's incredibly disingenuous to compare defaults on war reparations, like the
Treaty of Versailles, with loans willfully entered into by democratic
governance.

------
restalis
"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."

Actually I remember an article posted a while ago right here on HN about the
last payments for WW1. It is possible that Mr. Piketty may not have updated
information, but it is also possible that he deliberately ignores some facts
in order to stir a bigger debate.

~~~
hackerboos
This one [http://www.bbc.com/news/world-
europe-11442892](http://www.bbc.com/news/world-europe-11442892) ?

"By the time country was reunified, in 1990, the world had changed
dramatically since the days of Versailles, and policymakers decided to write
off most of the original sum."

So he's still correct.

~~~
restalis
"This one [http://www.bbc.com/news/world-
europe-11442892](http://www.bbc.com/news/world-europe-11442892) ?"

It was a similar article.

"So he's still correct."

The Germany's case was very, very different than that of Greece. After the
both wars the winning forces just dictated the sum and the loosing forces had
very little saying in the mater. It was most likely an exaggerated figure to
start with, probably out of PR reasons - "we made them pay, dear people!"
Later, when the emotions faded for the most part, a more realistic figure
could be put in discussion and sold to the wide public as an act of
generosity. Now let's talk about Greece and how many parallels can be drawn
here. Greece was not being dictated figures of debt, Greece took the money
willingly. Well, one could argue that only a small political elite made the
decisions, but the money were actually reaching the average persons too, as
budgetary salaries and pensions (and I bet they all enjoyed it). Write off
some of the debt? There's no real reason to do that (but if that would be what
it takes to bring them to saner fiscal practices, I would be OK with it
anyway). So, Mr. Piketty may be "correct" in some twisted view in which paid-
in-full war compensations are not actually recognized as such¹ and more
importantly - he _wants_ to be correct in an even more twisted context that
puts on the same footing a subject of dictated-upon debt and the one of self-
inflicted debt.

¹ Because the war winners have chosen later to adjust low the asked war
compensation, and by doing that they manage to morally deny the "repaid"
status. They could however have managed to achieve just the same by adjusting
high (i.e. continuously calling for higher and higher sum so that it could
never be paid in full).

------
socialist_coder
Help me understand something.

Piketty seems like he is in favor of repaying this debt by "inflation, a
special tax on private wealth, and debt relief."

But, he is against Greece leaving the Eurozone. So, how can they inflate their
currency?

Instead of inflation, which is impossible if Greece shares the Euro currency,
is he suggesting that some percentage of Greece's debts just get knocked off?
That would achieve the same result, I think.

------
yummyfajitas
So I've been vaguely following the Greece and Puerto Rico situations (the
Greece situation is causing me to put some trading strategies on hold), but
there is something I don't understand about it. How come so many left wing
advocates (Piketty, Krugman, etc) are coming out advocating for Greek
bailouts?

~~~
Daishiman
Greek debt is literally impossible to pay as it is. They're not advocating
default; they're advocating for the creditors to accept reality, write down
their losses, and move on.

------
tsunamifury
24 In the process, one of his debtors was brought in who owed him millions of
dollars.[c] 25 He couldn’t pay, so his master ordered that he be sold—along
with his wife, his children, and everything he owned—to pay the debt.

26 “But the man fell down before his master and begged him, ‘Please, be
patient with me, and I will pay it all.’ 27 Then his master was filled with
pity for him, and he released him and forgave his debt.

28 “But when the man left the king, he went to a fellow servant who owed him a
few thousand dollars.[d] He grabbed him by the throat and demanded instant
payment.

“His fellow servant fell down before him and begged for a little more time.
‘Be patient with me, and I will pay it,’ he pleaded. But his creditor wouldn’t
wait. He had the man arrested and put in prison until the debt could be paid
in full.

------
cuillevel3
Germany was rescued after WW2 to drive the European economy. Without German
exports the continent would have had no chance to recover. It's sure ironic
that Germany first destroyed the continent and then profited by rebuilding it,
but history doesn't seem to care about irony much.

I think the 'Germany never paid'-argument is flawed. The Marshall plan would
not have worked if Germany had been indebted. Instead this happened:
[https://en.wikipedia.org/wiki/German_reparations_for_World_W...](https://en.wikipedia.org/wiki/German_reparations_for_World_War_II)

If Greek defaults without paying their debt Germany (=tax payers) is about to
lose 90 billions. I'm not sure how this is profiting...

~~~
socialist_coder
That Wikipedia article says that Germany did not fully pay its debt to Greece.
So, I don't see your point.

If Greece was not on the Euro, it would simply print money and inflate its
currency until it could easily pay off it's debts. That gives you the same
result as what Germany did, which was to basically only pay off some of their
debt and just forget about the rest. The debtors lose, but hey, that's the
risk for loaning money, right?

~~~
cuillevel3
Sure there is some debate about a possible debt from Germany to Greece for
crimes committed in WW2. That's a big discussion by itself. Doesn't change the
fact that the original article ignores the Marshal Plan.

Anyways if Greek was not in the Euro it could devalue its currency. Which
would benefit their exports, if they had any. However their debt would still
be payable in Euro and the new currency would have a terrible exchange course.
So no win. There are scientist who say the real estate market might boom in
such a case. Since most Greeks are home owners that may provide some cash in
the short run: International investors and rich Greeks who transfered their
assets out of the country before the crash will buy in.

It's still unclear if a state can actually default. I guess if you're not
dependent on import you could risk not paying back your international
partners(/enemies). There are examples of countries regaining some power in
isolation.

I agree about the risk of lending money, that's probably the reason why so
much of this money was used to decouple Greece finance market and ensure
existing (private) contracts were honored.

~~~
dragonwriter
> It's still unclear if a state can actually default.

Its happened numerous times in the past, so its eminently clear that it _can_
actually happen.

~~~
cuillevel3
Yes you are right. I meant if a state can get out of his financial obligations
by defaulting. I read somewhere there is nothing like personal bankruptcy for
states. Argentina even lost a court case?

------
andy_ppp
Everyone always seems to forget in these discussions how fantastic for German
exports having instability in the Eurozone is...

~~~
DasIch
Exports have been an important part of the German economy for decades. People
aren't buying German products because they happen to be cheaper now and the
won't stop buying them should they get more expensive.

~~~
andy_ppp
>>> People aren't buying German products because they happen to be cheaper now

Well, I suppose you can just make up statements like that if you want. I could
say that basic economics disagrees with you, but what would be the point?

~~~
DasIch
Basic economics don't disagree with me at all. Production in Germany is
expensive. If price were the deciding factor German industry would be
irrelevant. The reason it isn't is because these products are specialized high
quality products. You don't buy them because they are cheaper than some
competitor, you buy them because there isn't an alternative product.

The current euro situation certainly helps keeps prices down and allows _more_
people to buy German products and that's a big part of why the German economy
is doing so much better than anyone else. It wouldn't be much worse with a
German currency either though.

~~~
andy_ppp
Yes, I get it, German exports are fantastic and they have been made even
better by the Greeks devaluing your currency! It's great that you agree with
me!

------
kephra
One must note, that this interview was given to the German newspaper "Die
Zeit". So its important to note, what he did not mention:

The repayment of Germans debt is only delayed till Germany has a peace treaty.
The 2+4 contract is not a peace treaty, but deliberate "instead a peace
treaty" just allows the Russian occupied part to join the US, UK and French
occupied parts.

The Euro-Zone is facing a dilemma. A debt cut, followed by inflation and
taxing of private assets, would require that Greece still has monetary
sovereignty. But all Euro states, even Germany and France, gave up their
monetary sovereignty. None of them is a complete sovereign state anymore. An
obscure bureaucracy in Brüssel is creating laws, that national governments
just have to sign. And entering EU is like a roman Catholic marriage. A nation
can join, but not leave EU.

------
hahan
it's not at all anything moral. it's business. the french and german banks
lent to Greece not out of charity, but of profit, a profit earn at the risk of
insolvency. Now the Greeks can pay back, that is, the french and german banks
failed their business. if the EU is to bail out, it's bailing out the BIG
BANKS, not the Greek People. Clear ? Business is business. why the banks would
do this risky business, because their principle amount and the interest earned
are guaranteed by EU. the situation now is that if the banks win, they have it
all; if the banks lose, the eu people pay for them. if you cant help blaming
someone, blame the BANKS and their ruthless risk taking.

------
serve_yay
Wow, he did not ever back down. An enjoyable read.

------
hahan
i'm sure that if the Greeks have the potential of killing as many people and
as cruelly as the German do, they would be tolerated and excused, whatever
they have done. It just happens that Greece is a small and weak nation that
everybody can safely point a finger at and accuse them of every problem there
is. it does not just happens to the Greek, but to all the
disadvantaged.whenever there's a crisis, some group would be targeted. they
caused it because they are lazy, they're indulgent, they're irresponsible,
they are weak, they're immoral,etc.be it women, colored, the poor,the
illiterate, Jews, you name it.

------
Tehnix
I feel sorry for the Greek people, but I personally favour throwing them out
of the Eurozone if they default on the debt.

It will be a very dangerous signal to send that you can borrow money, and not
pay it back without any retribution. This is particularly important since more
countries are going in the same direction as Greece (I think Spain and Puerto
Rico are close, but I might be wrong).

Besides that, it also hurts the confidence towards the Eurozone if the
countries in it can behave this way.

Also, am I the only one that finds it weird that they wait until _after_ the
deadline, to vote on whether or not to pay the debt back?

~~~
alexqgb
What you don't understand is that a debt represents a _risk to the lender_ ,
not a guarantee. If a debt _were_ a guarantee, then there would be no basis
for charging interest.

In a well regulated system, the people who make bad bets are not entitled to
retribution. They are "entitled" (read: expected) to go out of business. At
the very least, they suffer embarrassing losses that they must explain to
their shareholders.

"Moral hazard", properly understood, is a term used to describe conditions
that encourage reckless _lenders_. The threat of default is a _good_ thing.
That's what keeps otherwise rapacious lenders fearful enough to excercise good
judgment and prudent restraint. Indeed, in advanced economies, the power of
bankruptcy judges to wipe out debt is seens as an essential component of
healthy capital markets. Bad lenders get wiped out, and take the money of
their imprudent investors with them.

That's what should have happened to the private lenders who originated the
Greek debt. Instead, they got bailed out by EZ members who are following up
one bad choice with another in promising their electorates that they can
collect from a nation manifestly unable to pay.

~~~
tsotha
>If a debt were a guarantee, then there would be no basis for charging
interest.

That's going a bit far. The borrower would still pay interest for the use of
the money. Just not very much.

------
csense
According to this guy's argument, we have:

\- People and businesses who save money instead of spending it, get their
wealth confiscated by the state indirectly through inflation or directly
through the "special tax on private wealth"

\- People, businesses, and other countries who help the state out by loaning
it money have those loans retroactively converted into outright gifts by debt
relief measures.

So the solution to fiscal irresponsibility is to turn the fiscally responsible
into...I believe the technical term would be "suckers," or maybe "bag
holders."

~~~
parasubvert
Economics isn't a morality play. Throughout history there has been debt relief
and debtor jail... It depends on circumstance and power.

------
lancewiggs
The blame here, like the GFC, has to lie with the lenders, who are
sophisticated investors making very large profits from loans to
unsophisticated or (politically) pressured borrowers. The lenders in this case
assumed the loans have sovereign risk, but countries have risk too and
judgement day has come. Take your licks, write down the loans so they are
repayable and move on. If not then this will likely become a far bigger
problem for the world, and the lending institutions.

~~~
chernevik
The lenders presumed that Greek debt would always be acceptable to the ECB as
collateral, and thus would always be worth face value. This analysis of ECB
collateral policy proved correct. The blame, then, lays in the policies and
signals of the ECB, which were transparently dictated by the political urgency
of keeping Greece in the Euro.

Had the Eurozone and the ECB adhered strictly to their budget rules, and
penalized departures through ECB collateral policy, we'd be in a very
different place. Of course, had those players had used proper accounting and
figures, Greece would never have been qualified for the euro in the first
place.

------
bedhead
Sovereign debt is inherently unsecured. It's a credit card for the government,
nothing more. The primary motivation for servicing the debt is that it will
enable more borrowing. And like people, countries don't pay off their debts
for all sorts of reasons...not every default is created equally. At the least,
Piketty is being intellectually dishonest. Personally, I think he is really
just trying to appeal to the underdog by pointing out this poor analogue.

------
harmonicon
The medium page is not viewable for me apparently due to a copyright issue.
Here is an alternative site for the full transcript:

[http://www.zerohedge.com/news/2015-07-06/piketty-germany-
has...](http://www.zerohedge.com/news/2015-07-06/piketty-germany-has-never-
repaid-its-debts-it-has-no-standing-lecture-other-nations)

------
chmaynard
I'm not qualified to judge whether Piketty is correct but I can offer this
analogy. In the past, when I have loaned money to friends and family, my
attitude was "kiss the money goodbye". If the money was spent wisely and
served a useful purpose, I was happy. It's nice to get repaid, but it's not
essential.

~~~
fredm-de
Here's the problem: Merkel can't politically justify to give Greece more
german taxpayer money because it isn't spent wisely. After 5 years of crisis,
Greece still has a primary deficit, while maintaining more extensive welfare
programs than most EU Members. Even in the case of debt forgiveness, they
would still have a massive household deficit and be in the same situation
again soon.

So it's not about getting money back, it's about not burning more money.

~~~
the_why_of_y
> After 5 years of crisis, Greece still has a primary deficit,

Greece had a primary surplus in 2014.

[http://finance.yahoo.com/news/greece-revises-
down-2014-prima...](http://finance.yahoo.com/news/greece-revises-
down-2014-primary-170017774.html)

> while maintaining more extensive welfare programs than most EU Members.

What extensive welfare programs would that be? The 12 months of unemployment
insurance? They don't even have a means-tested program to ensure a subsistence
minimum for people younger than 45 years!

[http://www.keepeek.com/Digital-Asset-
Management/oecd/governa...](http://www.keepeek.com/Digital-Asset-
Management/oecd/governance/greece-reform-of-social-welfare-programmes/the-
current-greek-benefit-system_9789264196490-7-en#page4)

------
dmichulke
Sorry, first the outburst, then the argument:

Such a load of bullshit!

The reason: _What are you talking about? Generous? Currently, Germany is
profiting from Greece as it extends loans at comparatively high interest
rates._

The interviewer suggests with his question that it's about generosity? (come
on!) Piketty responds that Germany is profiting.

Using the math I learned, adding up say 5 years of 5% doesn't even come close
to the 50%-80% haircut that's gonna be needed. So how is there profiting?

Even worse: In the end, the creditors of sovereigns are rarely other
sovereigns but banks and funds. The former will be probably bailed out by the
taxpayer, the latter is usually pensions of taxpayers. Of course, the
sovereigns themselves are funded by the taxpayer, too.

So no matter the result, it's not about generosity, there is no profiting
(except for the few) and someone's got to pay (debts don't disappear) and he
(the taxpayer) is not even mentioned.

I sincerely get angry when I read such "elitist" opinions that completely
contort and ignore facts.

------
EGreg
[http://www.nationofchange.org/2015/07/05/greece-what-you-
are...](http://www.nationofchange.org/2015/07/05/greece-what-you-are-not-
being-told-by-the-media/)

------
mhd
Debt cuts are one thing, but I see no reason to believe that there's a wide
enough acceptance for a EU-wide fiscal policy to go along with the unified
monetary policy. I _might_ see France and Germany going along with that
(mostly because it'll basically be their policy), but the UK won't have none
of it -- and I don't think the PIIGS states would accept it either.

On the other hand, if things keep going wrong, people might just be forced to
accept this as a fact, I just hope it won't be too late by then.

------
jensen123
So, Piketty wants to forgive debt, and he thinks it's a bad idea to kick
states out of the Eurozone, since that supposedly will hurt confidence. And he
wants a new European institution that will determine the maximum allowable
budget deficit, in order to prevent the regrowth of debt. But if kicking
states out is taboo, then I wonder what he would do if a state exceeds this
maximum allowable budget deficit?

------
cm2187
If you believe Piketty, debt is never meant to be repaid and no one should
therefore ever invest in sovereign debt. That would solve the debt debate. No
creditor = no need to worry about whether we want to pile more debt.

And he has a point. I personally don't believe that any of the US, Japanese
and European sovereign debt will ever be repaid. The whole thing is a ponzi
scheme. Investors hope that their investment will mature before the music
stops. That's worth AAA...

~~~
fiatjaf
It is not a Ponzi scheme if it is not always and necessarily growing.

~~~
cm2187
Most western countries can't even afford paying the interest of their debt. So
as it is, it is kinda necessarily growing.

But the ponzi scheme aspect is rather the fact that countries can only pay
back debt with new borrowing. If investors stop rolling their debt, even the
US would collapse within a few months.

~~~
haberman
> Most western countries can't even afford paying the interest of their debt.

If that were true, the countries would be in default. And yet they are not.

~~~
cm2187
France for instance has a primary deficit:
[https://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=325.GFS.A....](https://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=325.GFS.A.N.FR.W0.S13.S1._Z.B.B9P._Z._Z._Z.XDC._Z.S.V.N._T)
I.e. the state budget is in deficit even before the interest on the debt. So
it borrows just to repay the interest plus that primary deficit.

These countries are not in default but they are definitely broke and reliant
on debt to an insane level.

~~~
fiatjaf
I agree that almost all countries in the world are in an insane situation, but
that's still not a Ponzi scheme. They can repay the debt if they want, they
have other sources of income other than loans -- and these are still much
larger than these loans they take every year plus interest --, namely their
taxpayers pockets.

I agree that this is not good, not fair, and that it should be a crime to get
other people's money like that, but it is not a Ponzi scheme.

~~~
cm2187
They cannot repay this debt. France debt to gdp is reaching 100%. They cannot
even gather the political steam to stop increasing their debt, and they have a
pension wall coming their way, an ageing population, an increasingly
illiterate and unemployed youth. This debt will never be repaid.

And like all individuals who keep borrowing more to sustain their life style,
and who use the credit card to repay the interest on their loan, it stops when
creditors loose trust in them and stop bringing fresh money. And then it
collapses. It is an almost identical mechanism than a ponzi scheme.

------
vacri
This guy is a reknowned economist? He's conflating "war reparations" with
"external debt", and also seems to have missed the big fanfare recently when
Germany paid the last of it's WWI reparations - instead he claims they _never_
paid any WWI or WWII reparations. Similarly, 'England took 100 years to repay'
he claims as the way forward, yet ignores that Germany took 92 to pay their
WWI debt[1]. Not hard, I guess, since he thinks that there was no repayment at
all.

He also talks of Germany's post WWII debt completely independently of the
Marshall Plan and the Allies pouring money in to counter the Soviets. This is
clearly just an axe being ground.

[1][http://www.dailymail.co.uk/news/article-1315869/Germany-
end-...](http://www.dailymail.co.uk/news/article-1315869/Germany-end-World-
War-One-reparations-92-years-59m-final-payment.html)

~~~
csallen
_> He's conflating "war reparations" with "external debt"_

War reparations are a type of debt. The terms aren't mutually exclusive. Nor
is Piketty saying they are the exact same thing. I fail to see your point
here.

 _> instead he claims they never paid any WWI or WWII reparations._

Where did he say never paid "any"? He very clearly outlines two methods of
eliminating debt, and makes the case that Germany used the very method that it
is now denying Greece.

Your post seems very straw-mannish.

~~~
vacri
> _The terms aren 't mutually exclusive._

'Conflate' doesn't mean that the terms are supposedly mutually exclusive.

> _Nor is Piketty saying they are the exact same thing._

The _only_ example of 'external debt' Piketty is talking about is war
reparations. There is nothing else suggested there - it's all war reparations.
That's not the same kind of debt as the debt that Greece faces.

War reparations are an arbitrary debt anyway, only paid by losers. Where are
the war reparations the US is paying Iraq for storming in and destroying
everything? Germany doesn't shoulder sole responsibility for WWI; they simply
lost, so the other guys got to demand payment. It's not like Germany exchanged
that debt for goods or services rendered, living beyond their means. And even
when the war reparations were being decided on, there were plenty of people on
the victor's side saying "whoah, this is ridiculous!".

What does it mean to be accused of 'not paying your debts' when even people on
the other side are calling for the arbitrary punitive measures to be smaller?

> _Where did he say never paid "any"?_

True, he didn't say 'any', but there's still plenty of other problems in what
he's saying - such as the timeframes for repayment. And there is zero mention
of any of the other political factors involved, such as staving off the
Soviets. The situation that postwar Germany is in has little to do with
modern-day Greece.

\--

Edit: Another thing that doesn't show up on the balance books in the aftermath
of a world war is the redrawing of borders. After both world wars, Germany had
it's borders redrawn, and disasterously in the case of WWII. Also, in addition
to the financial debt from war reparations, after WWI, Germany had it's
colonial holdings stripped.

Neither of these two things are anything like what's happening in Greece at
the moment.

------
eudox
Now that this thread's on the first spot of the front page, can we admit HN
isn't a libertarian echo chamber?

~~~
Maken
Was it supposed to be?

~~~
eudox
You hear the claim annoyingly often.

~~~
minot
I am still new here but as far as I understand upvoting is not the same as
agreeing.

~~~
shiggerino
On HN it is. Let's face it, that's the way it works on Reddit too, the
difference is that HN aren't sanctimonious pricks about it.

------
sunstone
This has the ring of truth.

------
shockzzz
Who here is a real economist that has the ability for pointed criticism? Share
your thoughts, please.

------
minot
The countries that were the Allied powers are in no position to call out
Germany for not repaying its debts after the second world war because they
originated from the way the Allied powers handled the money situation during
and after the Great War.

Look at this quote:

> 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.

In my opinion, this economist just wants to be the next Finance Minister for
Greece. If the "older generation" (and I don't know how we can call what
happened until six years ago a different generation but we'll let that slide)
forged books, then cut them off. Cut their pensions. Cut their retirements.
Make them come back to work. You can't blame the "older generation" and still
let them retire at 50.

It is incredibly insensitive to blame the German victims of the Versailles
Treaty. Do people blame Germany for France's greed? I mean it is pretty
evident that the growth of Nazis in Germany came directly from what the Allies
levied on Germany.

Moreover, to say that the situation in 2008-09 was equivalent to the horrors
that people faced before and during the second world is nothing short of
rewriting history. I don't think the people who lived through the great
depression would take very kindly of statements like:

> 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.

With all that being said, I must agree with him in one key point:

> A restructuring of all debt, not just in Greece but in several European
> countries, is inevitable.

Eurozone must stick together. However, the Greeks must realize a compromise
consists of a give and take. They must seek answers from those who were in
power in Athens before 2009.

In hindsight, even organizing the 2004 Olympics was a horrible idea. But then
hindsight is 20/20.

~~~
jqm
"> 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."

Agree with your point. While the quote does have some merit, Germany had
bottom up drastic structural change forced upon it before the "youth" were
excused.

------
mrottenkolber
The interviewer completely oversteps his boundaries here. In case anybody
wonders: "Die Zeit" is Germany's tabloid version of a politics paper (similar
in lack of quality to "Der Spiegel"). This interview illustrates whats wrong
with these tabloids very clearly: Bias, ignorance and uneducated employees.

Piketty brings up some good points but the interview is painful to read, like
dragging a wet mattress up a stairwell.

~~~
subpixel
DER SPIEGEL lacks quality? Would you care to back that up? It's one of the
most respected publications in Europe, with excellent investigative reporting.

~~~
fwn
breaking: Some random footballer changed from a random team to a different
random team!

..now let's push this to all devices.

------
hoggle
This is the time to show solidarity by activating our resources and bootstrap
a _new_ economy.

The banks together with our rampant financial illiteracy all need to go, are
we still not able to scale blockchain transactions? Is there a secure
"libbitcoin" written in Rust yet? Do we have super secure and crypto currency
focused "micro" operating systems / servers on open hardware?

Where are the people working on this? As a global economy - and civilization -
we need to stick together and show some love and ingenuity.

------
spikels
This guy may be pretty good with data collection but his ability to interpret
anything is compromised by ideology. His early academic work was solid with
only a bit of political bias but now that he is famous he feels compelled to
opine about all sorts of things he barely understands so his politics shine
through. This Q&A just confirms this trend.

I hope he realizes that he and other progressive economic pundits (Krugman,
Stiglitz) are in part responsible for the disaster that is now unfolding in
Greece.

------
adventured
"The second method is much faster. ... Essentially, it consists of three
components: inflation, a special tax on private wealth, and debt relief."

So Piketty is advocating a special tax on the poor. The group of people that
can least deal with inflation, with no ability to shift assets or income to
avoid it, nor deal with the increased cost of goods in relation to their
debased incomes.

~~~
vruiz
How do you go from "tax on private wealth" to "tax on the poor"?

~~~
adventured
Inflation always hits the non-rich the hardest. The rich have countless
options for avoiding inflation. Those that are primarily wage dependent, do
not.

This is why the wealth gap has expanded so much in the US the last 15 years:
the abuse levied on the dollar. Take a look at how nearly every single thing
priced in dollars zoomed after 2001, including the GDP of every nation on
earth and commodities - all went up simultaneously, often dramatically, and
all stopped going up simultaneously. That was the dollar losing value, aka the
non-rich in America having their standard of living hammered, while the rich
were able to shield themselves from the damage, leading to a vastly expanded
wealth gap.

~~~
bodyfour
Your first sentence makes some sense, but your second is way off base.

Over a time scale of generations the wealth gap is controlled by larger
social/taxation/etc questions. (For one example, in the US more public money
is spent educating a rich student than a poor one) However, in the shorter
day-to-day or year-to-year time scales it's mostly just a reflection of equity
values. The rich have a lot of their money in equities and the poor have none.
If at the closing bell the stock markets are up then the wealth gap just
increased that day; if they're down it has shrunk.

The "dollar losing value" argument is silly. The opponents of loose monetary
policy (and especially gold bugs and bitcoin fanboys) have been predicting
sky-high inflation. When it didn't show up on cue their line morphed into this
wishy-washy claim that inflation is somehow secretly high. Believe me, when
inflation is high its not a secret.

------
ChuckMcM
I wonder if this will end up being "The Interview" in Piketty's career. I
realize it was translated but even so it seems the most inartful discussion of
a complex subject by someone considered an expert that I've seen in a long
while. I reminds me a bit of Linus Pauling's interviews about vitamins where
he goes off the rails.

~~~
tcbawo
Historical context aside, he does have a good point in the end. Greece's
credit card is maxed out and it doesn't appear that any amount of
restructuring will make it possible to repay in full.

~~~
ChuckMcM
We will certainly see. Given the rhetoric I expect Greece to simply disavow
the debt, leave the Euro Zone, and let them figure it out. It isn't like you
can repossess a country.

The interesting question then is what happens next. Either they recover their
economy (at least briefly) because they aren't carrying any sort of debt costs
and the rest of the EU does nothing? Look to see Spain and maybe Portugal jump
ship as well. The EU freezes them out, basically letting the black market set
the value of the drachma, and we see hyper inflation in Greece where the price
of everything goes up several hundred percent a year (maybe even a month) like
it did in Argentina. Or maybe we see the Russians bail them out and give them
a favorable exchange rate to roubles which can then be converted into dollars
or euros. That sort of "help" comes with some strings that perhaps the Greek
people will put up with, perhaps not. No matter what we'll get to see what
happens when a country does the equivalent of filing for bankruptcy.

My guess is that Greece will see economic turmoil like the various South
American countries for the next 50 years, but its only a guess as I don't
think we've been in this sort of situation in Europe since the end of WWII.

I think Piketty could have said that without insulting the Germans.

