

Maybe Greece Should Go Bankrupt - cwan
http://www.cato-at-liberty.org/2010/02/10/maybe-greece-should-go-bankrupt/

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yannis
From [http://www.ft.com/cms/s/0/f90bca10-1679-11df-
bf44-00144feab4...](http://www.ft.com/cms/s/0/f90bca10-1679-11df-
bf44-00144feab49a.html)

 _On reflection, it is appropriate that the fiscal crisis of the west has
begun in Greece, the birthplace of western civilization. Soon it will cross
the channel to Britain. But the key question is when that crisis will reach
the last bastion of western power, on the other side of the Atlantic._

The IMF recently published estimates of the fiscal adjustments developed
economies would need to make to restore fiscal stability over the decade
ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of
GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place?
Step forward America, which would need to tighten fiscal policy by 8.8 per
cent of GDP to satisfy the IMF.

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iujhygfbh
What exactly does it mean for a country to go bankrupt? Do the creditors get
the assets?

If a chinese construction company is owed money for a government project do
they get part of the country?

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_delirium
It just means they default on the loans. The creditors only get what the
country chooses to give them (if anything), which is usually negotiated with
some eye towards balancing the country's interests against the harm to their
future ability to get loans if they screw the creditors too much. See:
[http://en.wikipedia.org/wiki/Default_(finance)#Sovereign_def...](http://en.wikipedia.org/wiki/Default_\(finance\)#Sovereign_defaults)

~~~
iujhygfbh
But bankrupt means you don't run the company/country anymore - they call in
the receivers, and KPMG or whoever sell off the assets for scrap.

~~~
_delirium
Yeah, from that definition of bankruptcy it's a poor choice of words, because
sovereign countries can't go bankrupt in the sense that bankruptcy law means.
They're colloquially bankrupt in the sense of "not able to pay their bills",
but not legally in the sense of "in court-supervised receivership"--- because
there is no world government, and therefore no bankruptcy court with
jurisdiction.

~~~
iujhygfbh
Interesting idea though for a small country like Tuvavlu - just sell the
country to the highest bidder. If say an online gambling company wants to be
sure of favorable treatment it could just buy the government wholesale instead
of having to buy it one politician at a time.

It's only what say Lichtenstein, the channel islands, Bermuda have de-facto
done.

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dkimball
I'm not a libertarian, to say the least, but I think that this writer has a
point. I don't know where the saying originates that "a democracy only
survives until its citizens realize that they can vote themselves money" -- I
believe it was a British historian writing about Athens in the 1750s -- but
it's intensely relevant here. Greece, or any country, can only support a large
public sector (apparently not overpaid so much as overpopulated) on the back
of a large productive sector -- not necessarily a private sector (just ask the
People's Liberation Army and its subsidiaries), but something or other that's
generating wealth.

I'd also emphasize _delerium's passing comment about a state needing to worry
about its future ability to get loans. The combination of the Industrial
Revolution and pogrom-proof banking have made this less likely, but as late as
the 18th century there was always the possibility of a country running out of
money; Philip II's bankruptcy is a particularly famous one. If that (or
extreme inflation) starts happening again, it will make everyone's lives
harder.

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_delirium
The article keeps talking about how civil servants are overpaid, which I don't
think is true. There are _too many_ of them, but they aren't particularly well
paid; the average is around €20,000.

~~~
dantheman
In America many civil servants are overpaid when you look at total
compensation. The amount of retirement that needs to be paid is ridiculous and
most govs didn't actually set aside money to pay it.

~~~
_delirium
That I agree with, but it's a more general issue about the temptation to make
future promises you can't pay for, and is also true in the private sector.
Employers in general, public and private, make promises of future payments
they can't pay for, don't set aside the money, and just kick the can down the
road to the next generation of management. It's one reason so many American
companies go bankrupt about 30-40 years after their peak, which coincidentally
is when their pension obligations start coming due.

~~~
anamax
> That I agree with, but it's a more general issue about the temptation to
> make future promises you can't pay for, and is also true in the private
> sector.

There's an important difference. If IBM can't pay the pensions that it
promised, IBM pensioners take the hit. If San Jose can't pay the pensions that
it promised, I take the hit via taxes.

~~~
_delirium
Isn't that actually worse? Not only can IBM screw its pensioners, but the
pensioners have no recourse: IBM's shareholders get to keep decades of profits
gotten on the basis of promises that were later breached, and limited
liability means those dividends can't be clawed back to pay the company's
obligations.

~~~
anamax
> Isn't that actually worse?

For whom? Not for me.

> Not only can IBM screw its pensioners, but the pensioners have no recourse

They made a bet. Since they were willing to take the winnings, they should
take the loss.

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emilind
This is fun, maybe I can get my points into negative territory!

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emilind
Cato will never go bankrupt 'cos the wingnut welfare don't stop.

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rglovejoy
Flagged. This is not Reddit.

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emilind
I'm sorry, people are free to post right-wing propaganda, but not free to
comment on it?

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_delirium
I suppose the ideal would be not to have such articles posted at all, since
this isn't really the place for this sort of hyper-partisan stuff, whether
from Cato or the _Socialist Worker_.

~~~
gyardley
The content of the article should be evaluated on its own merits, whatever
your opinion of the source. Even the most partisan individual can make a good
argument.

~~~
davidw
It simply is not hacker news, though, unless people want to turn this into
some sort of political debate site, which would be very, very easy. It's way
easier to find articles about politics and economics than it is to find good
articles about hacking and startups, and they're far 'stickier' in terms of
drawing people into lengthly, pointless discussions that end up in flame wars.
As this thread demonstrates quite well.

