
Behind Germany’s refusal to grant Greece debt relief - wsc981
http://yanisvaroufakis.eu/2015/07/11/behind-germanys-refusal-to-grant-greece-debt-relief-op-ed-in-the-guardian/
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tlogan
Since I'm from that part of the world (visiting Greece, Balkans and Germany
regularly), I will give some feedback here...

We have saying here "owns money as Greece" \- and that sayings was coined in
19th century. In 1822 Greece declared independece from Ottoman Empire and by
1880 Greece owned 5.243.428 marks to... guess? Germany.

From point of Greece, it is _much_ better for them that Greece leaves
Eurozone. They already occurred 80% of pain so there is not so much to lose.
With Drachmas they will have some inflation and inflation will fix entitlement
problem. And tourism will become very very competitive. And they can fix tax
evasion problem on their own.

From point of France - that will be disaster: the euro an ECB is designed for
economies and societies similar to Germany and German's influence in Europe
will raise.

This crisis is pure politics now.

Macedonians have joke that Greece should be renamed: "the former European
country Greece".

~~~
scarmig
To readers who don't get the joke: lots of ill-will exists between Greece and
Macedonia over a naming dispute, which has led Macedonia to be known as FYROM
(the Former Yugoslav Republic of Macedonia) on Google Maps.

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Keyframe
Didn't Greece get a write-off once already? Why hasn't he mentioned that?
[http://www.bloomberg.com/news/articles/2011-10-27/papandreou...](http://www.bloomberg.com/news/articles/2011-10-27/papandreou-
says-new-funding-gives-greece-time-new-prospects)

What would make it different this time around?

~~~
leereeves
According to eurostat, Greek consolidated gross debt was 356bn € in 2011,
305bn € in 2012. (This seems to be sometime in the middle of each year.)

There was a write-off, but it wasn't enough.

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mianos
If they forgive some of their debt and they don't radically restructure their
economy they will need to be bailed out over and over again. We have the same
thing with employment benefits on a micro-scale here in Australia, people
become so used to free money they don't know any better because they have
never seen any other system. Its hard to blame them because they don't know
any different so they think it's normal.

~~~
vidarh
They _have_ restructured substantially. Enough so that they were on track for
a substantial primary surplus. There's much more to do, but the primary
problem for the last year has been managing the crushing debt load, not the
Greek government.

~~~
anabis
There are different opinions on restructuring being enough.

Still not having a land registry after starting in 1994 gives me a pause.

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gonvaled
Is he mad, delusional, crazy or one of the few sincere politicians in Europe?
I can not make up my mind ...

This theory would indeed explain many things.

~~~
TheOtherHobbes
He's better educated than most politicians in Europe - including most finance
ministers.

I wasn't expecting a deal, and lo - it seems a deal will not happen.

Greece could offer to sell its people into slavery, and it seems that still
wouldn't be enough for certain elements in the European nomenklatura.

So Grexit it is.

If anyone is crazy, mad, and delusional, it's the German establishment.
Schauble would rather rob his banks of any timetable for repayment than deal
with financial reality like a rational adult.

~~~
MarkMc
I don't understand why you rail against the 'German establishment'. Aren't
they just implanting the wishes of the German people? Same for the Finns,
Latvians, etc.

~~~
tomp
Many people in EU think about the situation as "give Greeks more money" vs
"give Greeks 0 money", whereas in reality the situation is "get some Greek
debt repaid" vs "get 0 Greek debt repaid". Obviously, in the first case, the
latter is the better option, while in the second case, the former is. It's
mainly the politicians' fault of presenting the issue in terms of the first
two options to their people.

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Mithaldu
Given how insane past decisions of Schäuble have been* Yanis' assessment of
him makes a lot of sense. His politics have always swayed between hilarious
ignorance, impotent aggression and seemingly crippling senility. Treating the
"teaching" of other EU members in a war-like fashion would fit the scheme.

* For one he wanted to use a hypthetical threat german harbors by terrorists who would drive ships with bombs into them to force the german government into creating legislation to let the german army operate with live weapons inside german borders; as well as let them shoot down passenger planes within german borders.

* Secondly he wanted to create a "federal trojan", a virus he insisted would be capable of infiltrating EVERY computer. Ever. And he wanted its use to be fully legal.

~~~
th0br0
I wouldn't really call his past decisions insane, although I agree with you
that he's our (German) version of a political hardliner.

Personally, I would describe his reasoning and actions as in line with the aim
of always putting the German state (not necessarily its people) first. Maybe
his idol is Bismarck, maybe there's some other reason for his actions. Who
knows; I surely don't. It is possible, of course, that his views and behaviour
have become quite disconnected from the "real" world. After all, he's been a
MP for 43 years now - making him the most senior MP in the history of the FRG.
But then, he's seen quite a few global disasters happening from a political
perspective.

In the end, right now, he's doing a fairly good job of maintaining a stable
German economic position in the EU/the world and is able to even strengthen
Germany's global political position as well. This rather aggressive damage
control certainly doesn't support the ideals that the EU is built upon, but
then who knows whether he subscribed to it in the first place? I honestly
believe that, should the EU fail in the coming decade, he'll be remembered
quite positively.

~~~
Mithaldu
I can kind of see how the first two could maybe, possibly, be seen as not
insane. However, how do you defend the Bundestrojaner thing, in light of the
fact that what he intended was literally impossible?

~~~
th0br0
I would call that a profound lack of knowledge (or concious ignorance
thereof?) in combination with the fact that it's always better to claim the
impossible (because you can polarise the masses more easily and scale down
your claim later on once the main challenge - getting things things passed -
is done with).

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agopaul
As a European I find German foreign policy quite insulting. This needs to
change in one way or the other.

~~~
copx
As a German I find your complete misrepresentation of reality insulting. The
German political class is the reason why Greece still has the Euro.

The Eastern Europeans never wanted to bail-out the Greeks to begin with, and
have zero sympathy for their cries about inhumane austerity because the
"austere" Greeks are still better off than the Eastern Europeans. Thus any
transfer of money from e.g. Lithuania to Greece is perceived as a crying
injustice.

But even in Western Europe Germany is close to being Greece's best friend. The
first bail-out was almost sabotaged by the Finns when they demanded collateral
for their money. Which caused the Dutch to ask for that too. Meanwhile Evil
Evil Schäuble knew that the Greeks would never be able to pay back that money
- and lied to the German people about that "your money is safe, we will get
everything back", he said.. shortly before agreeing to the first haircut.
Billions of Euros of German tax payer money evaporated.

Without the German government Finnish and Dutch ships would have transported
away the Greek statues, gold, and whatever other valuable thing they could
find. And if "European solidarity" depended on the Eastern Europeans the
Greeks would have never gotten a cent.

The Greeks who are so fond of the Euro should be endlessly thankful to the
German political class (not the people - they never supported this bail-out).

I think this is also the primary reason why Schäuble does not want another
haircut. His original lie would become even more severe and the German
electorate would become even angrier.

~~~
youngtaff
But Greece didn't need bailing out in the first place, they could have
defaulted and let the banks carry the can (after all loans are a risk), but
German banks would have gone bust and Merkel et al couldn't stomach that so
they transferred the banks debt onto the EU public.

German consistently runs a trade-surplus that's in excess of EU treaties but
remains unwilling to raise demand at home, this creates a huge imbalance at
the heart of the Euro.|

When the Euro came into being it was obvious to many people (and stated
widely) that the interest rates were set to suit Germany and were far to low
for many of the other countries.

Germany is at the heart of the problem of the Euro and they can't or won't see
it

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cm2187
Leaving the euro zone is in Greece's own interest anyway. Greece is in the
position it is today because it cannot execute on its structural reforms. It
still cannot raise taxes and has an overweight public sector. Leaving the euro
zone will at least improve competitivity and give them a fighting chance to
produce again.

And this is beside the moral position of demanding that the german tax payers
cover the expenses of the Greek state that the Greek tax payers can't be
bothered to pay.

Disruption is often necessary. European countries have a nasty habbit of
preferring a permanent mild pain to a greater upfront pain and then drawing a
line and starting on a right foot.

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lifeisstillgood
tl;dr The Eurozone needs means to cope with differences in productivity and
fiscal policies - either needs free floating exchange rates (ie no Euro) or it
needs federal budgets and bonds (ie fiscal Union)

Either option scares the shit out of everyone so no one has brought it up.

The ex Greek finance minister thinks the current German finance minister is
forcing Greece to exit the Euro so they can force the fiscal Union closer -
but (implicitly) without having to messily deal with democracy or referendums.

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curiousjorge
supposedly greece exiting is more expensive than keeping them but at what
point do you kick out someone who is mooching off you and suddenly demanding
all sorts of things. It's like the beggar that becomes very choosy and feel a
huge entitlement. I don't know why this is the case, someone receiving so much
should feel humble and grateful but instead arrogance and a need for more.

having said that do they seriously expect greece to ever pay back the debt or
even let alone feed their citizens? When was the last time you heard something
made in Greece that wasn't in ancient history textbook and encyclopedia of
Gods? I also feel irked by the lack of rationalism from EU.

~~~
StavrosK
Where are you getting all these from? What Greece is saying is "we want to pay
back the debt without starving the lower-income citizens to death". That's
entitlement?

~~~
curiousjorge
>without starving the lower-income citizens to death

do you seriously believe Greece is capable of that if they are to go on their
own path? What industry is there to speak of in Greece? What goods or
resources are they willing to trade or offer to the rest of the world?

And why do you feel the need to make this into a political argument and not of
economics? Of course you can pay back the debt without starving it's own
people if they could, but they can't. There's nothing that I can see or EU
believes that Greece could pull itself out of debt and they are in for some
deep amount of money. Did you really expect EU to give them another get out of
jail card like they have all this time?

I'm just an observer, I don't work for EU.

~~~
coldtea
> _do you seriously believe Greece is capable of that if they are to go on
> their own path? What industry is there to speak of in Greece? What goods or
> resources are they willing to trade or offer to the rest of the world?_

Racist much? Greece has a import/export deficit (excluding oil) of around -1%.
They have a large tourism industry, a strong (worldwide competitive) shipping
industry, and they export food products, minerals (ores?) and lots of other
things besides.

> _And why do you feel the need to make this into a political argument and not
> of economics?_

Because Economics 101 already says the plan imposed and followed for 5 years
is illogical and doomed to failure. Check any leading economist on the issue
(except those serving in political positions in involved countries). Heck,
there's even an IMF report saying exactly that.

> _Did you really expect EU to give them another get out of jail card like
> they have all this time?_

"Get out of jail" card? Perhaps you should read some more into the history of
all this. The "card" Greece was shown for the last 5 years lead to a 25% GPD
fall, 30% unemployment (50% youth unemployment), huge pay cuts (over 40%), and
several other measures besides.

The only one who ever took a "get out of jail free card" in Europe was
Germany, who's national debt and war reccuperation payments were slashed over
60% (including war reccuperations to Greece, for destroying infrastructure and
leading to the death of 700.000 people, on top of getting a forced loan from
the Greek state while it was occupied they never repaid).

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m3talridl3y
Look for Greece to just start putting land up on ebay.

