Apparently, Greece owes Germany $80+ billion dollars[1]. Of course, if it were up to Greece alone, they'd prefer to say "just forgive our past loans and let's reset the odometer to 0 for a new set of loans. And oh, btw, don't expect to get paid back on the new loans either since we don't want your input on how to reform our ineffective government to even make payback possible."
People want to interfere with Greece because they took lots of other people's money.
If a company borrowed money from bond holders and timely payment is not possible, those bondholders can pressure the company to hire their turnaround managers in return for refinancing, or force it into bankruptcy and seize assets.
Whether it's a country or a company borrowing other people's money, it's hard to see how a "hands off" policy by the lenders would be possible.
[1]http://www.marketwatch.com/story/heres-how-much-greece-owes-...
Also, Greece did not dig themselves in this hole alone. Its a little telling that so many EU members kept lending to them despite ample signs of fiscal irresponsibility.
I agree with the general gist of your argument but you can't treat firms and nations and equals in this case. Greece's problem reflects a deeper concern of international debt structures and the concerns of the union against those of member nations.
"Keynes points to the material violation of the terms regarding reparations, territorial adjustments, and an equitable economic settlement as a blot on the honour of the western allies and a primary cause of a future war. Given that he was writing in 1919, his prediction that the next war would begin twenty years hence had an uncanny accuracy."
In particular, the northern 'ex protestant' nations are hesitant to piss away money on their southern friends. For a lot of reasons.
They will say this, even if it is the exact same company say, right before a crisis and 6 months into the crisis. See [1] for more information.
When Germany's economy was doing worse than EU average, Germany was the "sick child of Europe". Now they are doing great and they are the "locomotive engine of Europe".
Besides, how do you reconcile these "ex protestant" work ethics with the breathtaking corruption of the VW scandal?
[1] http://www.amazon.com/The-Halo-Effect-Business-Delusions/dp/...
This is not quite the same thing as taking a lot of other people's money.
A lot of the money never reached the ground, so most of the Greek people got very little benefit from it. Rather a lot of it went on defence boondoggles. See e.g.
http://www.theguardian.com/world/2012/apr/19/greece-military...
There also are claims Germany made lots of money on the crisis itself because it made it cheaper for them to borrow money (http://www.keeptalkinggreece.com/2015/08/10/study-germany-ma...)
I hear the same argument with the housing crisis; that people were somehow "suckered" into borrowing money. I don't understand how other people can be blamed for borrowing, spending, then failing to repay.
Also, if a company borrowed money and couldn't repay it, they can declare bankruptcy and have their debt restructured. Greece needs to have their debt restructured. Most financial experts say it's irresponsible to expect them to pay it all back, but Germany took those debts from the banks (in order to protect the banks) when it was already clear Greece couldn't pay, and then used their political weight to enforce full repayment.
The way Germany treated Greece is disgraceful and foolish on several different levels, and it's extremely damaging to the EU.
Can you cite a source of this and perhaps go in to it a bit more?
Regardless, it makes for more interesting reality tv than catching up with the Khlardäshiäns[2].
So before Greece was too late, they were too early because there wasn't a peace treaty yet. There's no way for them to win.
In any case, Germany had massive amounts of debt forgiven, so them tightening the screws when someone else owes them money, is very hypocritical. Add to that that Germany is really rich and could easily handle a $100 bn or $300 bn loss, whereas Greece is in serious trouble, and that's partially because of Germany.
The reason Germany is so unforgiving, is that back in 2008, Merkel wanted to rescue the banks from their bad loans, and when the German voters questioned whether that was wise, she promised that the loans would be repaid. Forgiving the loans now would be breaking that promise. Merkel wanting to save the banks from their own foolish risks is part of the problem. Had they not lent money to Greece, Greece would have had to restructure much earlier. Instead, Greece was allowed to live on money they didn't have, and all of Europe knew and was fine with that. Until the crisis hit, and now Greece is the scapegoat for everybody's problems.
I'm not saying Greece is innocent here; they obviously aren't. But almost everybody carries some of the blame here, especially Merkel, and now they're sacrificing Greece to absolve themselves of their own mistakes.
This is a hairy topic, with Germany insisting that these matters were closed in the Two-plus-Four Treaty, and Greece wanting to be repaid for their post WWII magnanimity, in addition to this being viewed as the Greek government trying to weasel themselves out of systemic issues and necessary reform using dubious legal claims.
Germans, and younger Germans in particular may also view this as a "sins of our forefathers" issue, which also strikes a nerve, especially since the claim seems frivolous to many.
If Greece were devastated by a natural disaster and demanded aid citing their waving of reparations more than 70 years ago, this would be viewed in a different light, but the general perception in Germany is that they brought this issue upon themselves, even though the situation is likely considerably more complex than that.
Very very controversial, that's as much as I'll say.
[0]https://en.wikipedia.org/wiki/German_reparations_for_World_W...
The weaker states in Europe should have never agreed to a currency union without any kind of fiscal or political union. It led to a massive bubble of stupidly cheap debt and speculative capital inflow, and then when the economy started looking iffy all the money flowed out again, and poof.
Losing control of your monetary policy is straightjacket enough when your economy dips, but under the rules of their debt deals, Greece also lost control over fiscal policy, and was forced to apply pro-cyclical cuts to government spending. They ended up in worse-than-great-depression level economic collapse, with absolutely no tools available to deal with it.
For Germany by contrast, the Euro has been great (though fiscal austerity in response to a recession was stupid for them too). Their currency has been artificially weak relative to their neighbors, helping them run huge trade surpluses.
Have you ever been to rural Mississippi or West Virginia?
I have, and I've also been to rural areas of the "second class" countries of EU, like Greece and Romania (not to mention pending member states like Bosnia). And it's actually striking how similar they are in terms of economic development. Granted, I still saw some livestock plowing in Romania-not a common sight in the US-but otherwise the poorer states of the US and the poorer nations of the EU are pretty on par. Particularly with respect to dwellings and the frequent lack of many of the accoutrements of what we consider "modern life" (Internet, computers, smart phones).
I'd say the urban areas of the poorer US states are slightly more developed than their counterparts in Romania and Greece, but the rural areas are pretty much on par.
And btw, the governments of those poorer US states are typically fairly cash poor and often indebted, because they have very poor tax bases.
And in terms of government corruption, the two are absolutely on par, I'd say.
There are certainly many poor rural people in the US who get screwed over by the society at large, just like there are many poor urban people who get screwed over by society, but that’s a different set of problems that federal transfers to keep states afloat doesn’t necessarily fix.
(I agree though that it would be nice if we in the US had a more effective set of social support systems to help individual struggling families. It would also be nice if we had stronger labor protections, a higher federal minimum wage, etc.)
You have seriously misunderstood the situations that you've seen. Yes there are poor people in Mississippi. No they do not live like poor people in Romania. They are probably similar in a way that looms large for you, in that they make different choices about their lives than you would make for them. An American who doesn't have a smartphone doesn't want one, which is a perfectly valid choice. [0] The use of animal traction in agriculture is also a valid choice, but one would be wrong to assume that the Amish are poor. It's especially problematic for "yuppies in McMansions" to attempt to universalize their idiosyncratic tastes in housing. Most of humanity does just fine without a giant pile of pine sticks and drywall.
[0] https://www.fcc.gov/consumers/guides/lifeline-affordable-tel...
Germany consistently operated at a net deficit of 6-8 B euro/year in terms of EU fees vs EU investment in Germany.
That same wealth transfer is taking place in the EU as well. Not on the same scale possibly, but it certainly takes place.
Greece's 6B net gain in 2008 makes up 1/9th of their total welfare spend in 2009 for instance (56B).
http://ec.europa.eu/budget/financialreport/2014/annex/3/inde...
https://stats.oecd.org/Index.aspx?DataSetCode=SOCX_AGG
I agree that it was not a good move to join the currency union for Greece. That was a bad choice by Greece, and a greedy move to manage finances short term with artificially cheap borrowing.
In poorer US states, about 10% of gross state product is collected as federal taxes, whereas something like 20–30% of gross state product comes to those states through various federal spending.
Moreover, lots of Greek debt (IIRC) was originally to banks which had lent lots of money without oversight; almost knowing that someone (the EU states) would take over the debt if need be... Of course Greece had borrowed recklessly on their end as well.
But I think the analogy and contrast to how US states work is really good. Want a single currency across multiple areas with differing economic performance? OK, but then better have mechanisms for supporting equal footing.
If you sign a legally binding document that you will repay a loan, plus interest, or your assets are on the line, what "oversight" do you need? Wouldn't the world be a better place if people paid money back as contracted, rather than ripping off (and somehow blaming) the lender? If you don't like the terms, don't accept them. "But we need money!" isn't an excuse.
If everyone repaid debts, then lending money wouldn't require interest. Interest expresses the danger that money may not be repaid as, for example, during bankruptcy proceedings.
Debt forgiveness has existed since the dawn of money. See [1] for more information.
[1] http://www.amazon.com/Debt-The-First-000-Years/dp/1612191290
On the other hand, where would we have been without the euro? Would it have been any better? I am not so sure.
And in the EU the richer states do support the poorer ones, but since long especially the UK opposes this. They don't see the benefit. I think it's well worth the money, even with the Greek. We cannot abandon them, and it would be a major political stupidity to do so, with Turkey and Russia going the wrong way. I think - in the end - all political leaders of importance will agree with this.
In Greece, the problem is corruption. It will be an uggly fight to turn this around. I hope this is that fight, because otherwise it's all for nothing, or it's only for the EU. I sincerely hope they can get rid of corruption, because it will make their life in the end a lot better. For now it's lots of misery though.
Although it was originally created to prevent future wars in Europe, the role it performed most effectively for most of its life was to be an incentive for countries on its borders to open their markets and become democracies. Spain, Portugal, Greece, and most of eastern Europe, left dictatorships and/or communism behind and joined the European gravy train all, all through the 80s and 90s.
But its borders are rather different now -- corrupt cronyism (to the East) and Islamic radicalisation (ISIS etc, to the south) are the main threatening neighbours. It's less effective at dealing with those, and there's not many countries it can dangle the carrot of membership in front of, and the prospects of them being accepted are lower.
So with the potential gains gone, it's left looking like a layer of bureaucracy and interference sitting heavy-handedly on top of two dozen market-based democratic economies.
Europe is generally a peaceful place, a decent political culture with relatively low tolerance for overtly sociopathic political actors. The corrupt cronyism is a real problem, a bigger problem outside the EU than in and most certainly not a new problem.
As someone with a mixed UK / Greek background it's been interesting and often painful seeing the current woes of the EU. Greece has had a lot of problems, many of which really do benefit from outside oversight. I've seen a large amount of corruption there, be it deliberate or just letting things slide. Having input from outside to try and stamp out some of the more rampant stuff is very much a good thing.
However this isn't always a good thing, the rise of the far right 'golden dawn' can very much be attributed to old stirrings of anti German sentiment, much of it based on inflammatory second world war tub thumping (although ignoring the fact that many of the particularly right wing areas now were Nazi sympathisers, go figure).
The UK has, in contrast, been much more high handed. I think a lot of the Greeks are worried but ultimately they really do want to stay in the EU, where as I'm not sure that's the case in England. There's this air of superiority, both from the colonial past and the nature of the UK as an island that lends itself well to always expecting to be treated specially for some reason.
Rather than forever going towards a broader union I can't help wondering if a more hazy framework would work better, rather than having an authority in Brussels/Strasbourg could we not have representatives from sovereign governments that debate these issues when they affect areas larger than countries? Much of the current legislation seems as though it doesn't really need to be done on such a sweeping scale.
It's weird, but we basically had decades of peace in Europe with only minor conflicts before WWI. Interestingly enough, most of this minor conflicts happened in the balkans, much like recent history.
EDIT: not trying to deny your observation, or your conclusion that EU was a success in this, just mentioning an interesting fact.
I think in terms of peace it's useful to distinguish between the EU and Europe. There have been a couple of wars in Europe in my lifetime. Not to mention a few military dictatorships (which had a kind of 'peace' I suppose - but not a good one), assassinations of leaders etc.
Maybe (hopefully!) we'll get through this without it imploding - maybe end up with a more Hanseatic League kind of set up, maybe more like the US. 'May you live in interesting times' and all that... ;-)
I think we've had proxy wars by major powers going back millenia - I don't think that's such a strange situation for Europe compared to free movement and cheap flights.
It's unthinkable at this point for any of the large nuclear powers (e.g. the permanent members of the UN security council) to engage each other in direct military confrontation. Barring an early armistice, there's a high likelihood of human extinction as soon as one side gains the upper hand and the other side believes it has nothing to lose.
Much safer for everyone to expand their sphere of influence through proxy wars.
"I do not know with what weapons World War III will be fought, but World War IV will be fought with sticks and stones."
So these + all the minor parties it's like 35% of votes more or less against the EU. This was back in 2012, it's currently probably higher.
The population at large also support leaving, and when the referendum happens this summer, I will be surprised if this ship of fools doesn't vote to be cast adrift.
I personally want out because of the Double Irish and the Dutch Sandwich. "Racist!" is the only argument the self-serving pro-EU movement have left, and no-one pays any attention to that word anymore.
The future of the UK lies where it always has, with the Commonwealth.
https://theconversation.com/with-or-without-eu-jeremy-corbyn...
Can you imagine a US state doing that? I don't think unions are reversible at this state in history. The national state is not exactly living a revival. This is majorly a financial crisis.
> This has left our national governments with a nice scapegoat, great for populists, nationalists and fringe politicians to use for their purposes
That is a very good observation. It's the reason Greece is suffering at the moment. But leaving the EU at this point would be even worse.
I might be wrong, but it's not my impression that the US laws are a hodgepodge of compromises between states. In many ways the US is more coherent. Americans are also viewing themselves as Americans first, secondly as Irish, Latino, whatever their ancestors origin might be. Only rarely do Americans define themselves as being Idahoan, Washingtonian or Michigander (Exception are Texan, New Yorker and maybe Californian). For most people in the EU European wont even be their second level identification, for me personally it might be third or forth level.
My point being that not wanting the EU or parts of it, has no consequences for my identity in the same way if would for a person in the US wanting his or her state to at least partially leave the union.
The nation state are seeing a revival. Areas like Catalonia want to be their own small separate nation, Scotland considered leaving the UK. Many EU members also want to move power from a distant and anonymous EU parliament, and give it back to their national parliaments. In some cases people want to move power even closer and adopt Swiss style democracy. I don't think it's to fare fetched to see a state like Bavaria in Germany wanting to move power from Berlin to Munich.
At this point I think internationalism and republicanism in Europe is sufficiently weakened that such an outcome is impossible in the near future.
The USA is ancient compare to the EU. The EU's first days were debated on the internet. The US' were debated by pamphleteers, distributed on horseback and had slavery as a side issue midway down a list of policy questions to debated later.
Could you imagine The US expanding its union? Could you imagine Mexico joining, the constitution being re-written?
I don't think we're bounded by what the US is or has done. Even the US isn't. Times change.
On exits
I don't think that option would be taken very often. (A) It would pressure the EU to be what it needs to be, a Union countries want to be a part of. (B) It would change the local political debate. At the moment, the anti-EU Trump^ can safely talk without it meaning anything. I think the EU should be built to withstand border changes, in both directions.
^Interesting how rarely EU politics is debated on HN compared to US politics. Hello brothers from across the Atlantic.
I'm not opposed to less drastic unions, however. Super-NAFTA? Free immigration? I'd vote for both of those. The thing we should do to help Mexico first is to end drug prohibition. We'll be harshly judged by history, for the violence to which we've subjected the people of Mexico.
Incidentally, many of the pieces into which USA might be broken would end drug prohibition fairly immediately once on their own.
Unions not reversible? Ask Yugoslavia, Czechoslovakia, or the USSR. Or within Europe currently, the Scottish and Basque separatist movements. The growth of the EU -- largely for financial reasons (access to EU development aid and a large market) -- has been an exception in an era of fragmentation.
After WW2, commies divided the land under their control into countries and forcibly relocated people around to match new borders in pursuit of "historic justice" and whatnot.
You can't compare US and EU. US was built more or less as a coherent whole - politically speaking. EU was jury rigged on top of autonomic political entities, some with hundreds of years and some tens of years of political sovereignty.
...unless you look at Eastern Europe. Poland and Hungary show that homogenous nation states are not as much a thing of the past than you'd thought, and that their 'revival' (they were never dead though!) is doing just fine.
Sounds like an amazing idea /s
The populists in Poland and Hungary made a story where good aspects of the current development (for example: competitive workforce, open borders) are taken for granted and bad aspects like perpetuating big differences (like, wages, or quality of public institutions) between Hungary/Austria or Poland/Germany are attributed to some evil manipulation by the seemingly neutral EU.
Every explanation for the big wage differences is quite complicated: you can't rely on any popular simple ideology. If market is efficient, why the difference? If state-regulated society is just, why the difference? This leaves space for quite stupid populist "solutions" that are not true, but at least short.
Full disclosure: I'm from the Czech republic.
But then again, I am fairly certain that EU integration helped with our progress, especially since we had corrupt ex-commies running the show ever since '89.
It stopped them from being too greedy, plus the aid, advice and reforms did help.
And now if some people who left return out of a feeling of patriotic duty or just wanting to improve their home country, they'll be much more effective with the knowledge they gained in western Europe...
The ability to manufacture for cheap and export without too many taxes and customs headaches really helped, too, and we've set a very low corporate income tax to attract foreign (mainly EU) companies here (which worked).
Also, i don't think Merkel has much say in any of this. Its her finance minister and his buddies at the ECB that is running the show.
That has been possible since the Treaty of Lisbon.
Look at Scotland. They wanted an independence vote from the UK. It would have been historically peaceful and safe independence. They would have joined the EU, maintained close ties with England. But, when push came to shove, Scotland didn't want it, mostly because of anxiety. That's a real pressure valve. If Scotland really wanted independence (like Ireland did 100 years ago) it would have passed.
It would also put pressure on the EU to improve. I want more democracy too. It wouldn't be bad to have countries demand it to stave off EU-exit politics.
The fact that politicians are avoiding to do a poll with almost 35% (total of left + right parties) of votes to openly Anti-EU party (this was in 2012, I imagine it's more now, and this is only people voting for openly anti-EU parties, the real figures are obviously higher) is also seen really negatively and does not help at all to improve the general opinion of the European Union.
To me, it's a modern identity. I have geographically dispersed friends and family. I am speaking to you online, right now and we are speaking candidly about political issues concerning us together. I don't even know where your'e from (Hello, by-the-way.) I appreciate the right to live in other EU countries and I would feel violated if it was curbed. I respect other European's rights to live here if they choose.
That's it. There is a lot of movement, btw and I think it's a good thing. The italians living here for 2 years before college and the Germans living in Paris for a year. The cousin who married a French girl. Maybe their grandchildren will feel differently.
We don't need to be anything in particular. We just need to function a little better. We'll feel whatever we feel. Our kids will feel what they feel and hopefully they won't bomb each others cities ever again.
I think the point was that Greece needs to change and arguably are incapable of making the decisions that need to be made. Germany felt that there was an need/opportunity to impose that change. Whether it was the right move or will be successful is a completely seperate discussion.
The rampant tax avoidance, the unsustainable pension system, the very low productivity and the culture that allowed Greece to lie their way into the EU all need to stop if they are going to be a successful part of Europe.
I believe you hit the nail, but not quite on the head.
The fact that it was possible to get into EU through systematic lies was a symptom of a much bigger problem. I remember when Greece joined. Everyone I know thought that it was an insane idea, because Greece simply wasn't ready or financially stable enough.
But at the time the main political drive in EU was expansion. It was almost as if the heads of EU states felt that unless the union was large enough it would be irrelevant. So the policy was expansion at all costs.
And there was nothing subtle about it. Hell, a Finnish politician got the seat of a commissary of EU expansion!
Not sure whether that was naked ambition or just institutional myopia.
You're making the mistake to think that "peoples" are a monolith. They are much less so than racists. Which, regardless of other problems that need to be addressed, should have a priority of not being given one inch. We should have learned that the hard way, and now again this rhetoric is trying to weasel its way into everywhere.
Say what you want, wish what you want, but it changed nearly nothing for the people who wanted to help before. Those who didn't were obstructing before and are exploiting it now. They just got louder and more violent, not more correct.
As we've seen in all countries migrants especially those with families end up being massive positives for the country and its biggest defenders.
What you're seeing also includes a lot of selection bias.
Just as you claim that a few bad apples shouldn't tarnish all migrants, you also have to accept that the "good apple" migrants that you're speaking of can't speak complete good of all potential migrants.
I.e. you're making the exact same type of generalization, just the opposite way.
Have you? What have YOU done besides be born in the right country? Put yourself on the other side of it. What if you'd be born in Syria and had a lovely life until all hell broke loose a few years ago? Would you be fighting ISIS? Fighting Assad? Or would you be begging EU states to let you in?
[dead] comments that are good can be rescued if enough users vouch for them. To do that, click the 'vouch' link at the top of the comment's page (which you get to by clicking its timestamp). But please only do this for comments that are both civil and substantive.
The EU has a well-defined mechanism for secession; it is what the "out" option on the UK referendum is about. Any country can get out of the EU within a couple of years if they really want that.
The EU is on shaky foundations. The original principles of free movement, free trade, solidarity & peace are great. I totally support them. They move the world in a liberal (ie liberty) direction and they really do promote the central goal, centuries of peace. Europe has been at peace for a logn time. It's an achievement, and we need to defend that. But, there was never a truly agreed upon and understandable basis for how these would be promoted and protected and an explicit definition of where and how the EU's authority ends and the State's begins. This has left our national governments with a nice scapegoat, great for populists, nationalists and fringe politicians to use for their purposes.
The Greek saga is a perfect example. Rather than an intelligent abstract policy of allowing Greek to make their own decisions, support with limited liability for the Union we get a German style bureaucratic approach. Regulation an oversight.
I also appreciate her refugee policy. My grandparents (like many's) were refugees in WWII. I think it came from a genuine place of human solidarity. I hope it doesn't sting Germany too badly.
I hope that the EU gets another round of constitutional, foundational work. Take as long as it takes, but do it right. This is for the next 200 years. The problem, as I see it, is that politics has polarized into pro and anti EU. Anti-EU political outsiders from either (or neither) traditional wings using anti-EU rhetoric as an easy populist tools and pro-EU insiders defending the EU as a bureaucratic status quo.
One thing I think needs to change urgently is an exit policy. We need a way for countries that don't want to be in, to get out. It will act as a relief from a lot of populist pressure. If the UK want out, they should have an available option. Similar for Greek. No hard feelings, civilized-like, we can still be friends, just do what the people want.