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.
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-...