Tyndmyr wrote:Why does anyone HAVE to do that? Clearly, they don't.
Yes, it is obviously more desirable for the hurting country to get free money/written off debt. But there is no motivation to be the donor in an ongoing relationship of that sort.
And if you make it policy that you HAVE to do it, even when they keep getting spend happy repeatedly, what incentive do they have to fix their spending issues? I mean, free money to fund your spending programs is kind of awesome all round.BattleMoose wrote:So no, people don't understand how interest works. An interest rate of x% does not mean the loan will never default. If that was the case, interest should be 0%.
If people don't understand the basics of economics then they should not be managing a countries fiscal policies. No ifs or buts. And the latter half is just wrong on the face of it. Even Australian bonds have a positive interest rate, and yeah, no way they will default for the period of the bond. Just not in the realm of reality.
This. It's one thing to complain about predatory loans being marketted to very young folks or something, on the basis of taking advantage of lesser access to knowledge...but if the nation can't manage money, then what? What higher authority is there to default upward to for that decision? The buck HAS to stop somewhere, and it's hard to argue that Greece didn't have the ability to get such knowledge.
Just as there is no requirement that others bail out Greece, there is likewise no requirement that Germany bail out the lenders. If they think they can do so safely for a net gain, cheers, let them try. But they don't *have* to. Nobody is going to march in with troops and make them.
It's not exactly like Greece borrowed a bunch of money, and are now welfare queens who've run out of money. You skipped over the intermediate steps of
Suffer economic losses worse than the Great Depression.
Would you choose to borrow money and spend it unwisely if you knew the "easy way out" was to spend the next decade under crushing austerity and impoverishment? Then once you made yourself a huge loser for years, then maybe, just maybe the German guy down the hall decides to pay your bills...except the bill was owed to him. So now he's giving you money so you can give it back to him. The metaphor breaks down since countries aren't people. (Otherwise you'd just declare bankruptcy, but without all the moral soapboxing) Are you claiming that both Portugal and Spain would choose to go through all the steps that Greece took just for the chance at a haircut?
What incentive does Greece have to make themselves a functioning prosperous economy instead of a literal welfare state? I dunno, maybe the part where they're a welfare state(to other nations) suffering 25% unemployment(really should be closer to 50%, their government is too bloated IIRC).
I guess "have to" is causing a major hangup in your mind. How about, "It's unproductive and wasteful to throw money at Greece with the stipulation that the money be spent to pay back the loans, especially since the money you threw at them is also a loan. In addition, Germans are under the unrealistic fiction that if they keep loaning more money to Greece, Greeks will somehow* pay them back." The faster more efficient answer is to reduce the debtload. Now why would the Germans purposely throw their good money at Greece for loans, but refuse to use that money to pay off the debt? Mostly it's politically easier to call it a "loan" that will never be paid back instead of a debt reduction. Which sparks outrage, that you handily enough symbolize in your diatribe.
That said, it looks like the Germans are playing hardball. I wonder if this is like the US debt ceiling except neither side blinks and the EU breaks apart.
*The Germans based this calculation on Greece magically turning from the least productive state in the union to the most productive despite austerity, corruption, and the economy shrinking 25%.
PS Weren't the Germans the ones footing the bill for this Euro Project in the first place? I guess enthusiasm for a united expanding Europe has waned since the project first started.