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To think that Greece should have some debt forgiveness

(83 Posts)
ReallyTired Wed 15-Jul-15 11:15:55

I would like Greece to leave the Euro and have help in rebuilding their ecomony. Remaining in the Euro and having high taxes will mean that no one will be able to go on holiday there. I feel that giving more loans to Greece will just make their problems worse. There is simply no way that Greece will ever be able to pay those loans back.

Brutal repatations after the first world war cause untold hardship in Germany. It is thought that the brutally of the reparations on ordinary German people was a factor in the rise of Hitler and the Nazi party by some historians. In 1953 many European countries including Greece, Spain, Italy and Ireland to mention a couple wrote of a sizable chunk of German debt. These countries helped to build the sucessful post war German ecomony. Those countries forgave Germany for far more serious things than not paying loans back.

Germany is one of the countries most resistant for giving Greece a debt haircut. I feel that Chancellor Merkal should be reminded of the parable of the debtor. Its is morally repudgent to have an EU country reduced to third world status. If Greece had a debt haircut then there would be more chance of getting loans paid back. There is no way that Greece can afford the interest payments yet alone pay off any of the debt. The international monetory fund says that the level of debt is totally unsubtainable for the Greek ecomony.

OTheHugeManatee Wed 15-Jul-15 11:40:35

The electorate of Greece voted for the policies that got them into all this mess - the tax evasion combined with hugely generous public spending. Meanwhile the electorate of Germany is strongly against the idea of having to pay for the policies that Greek politicians promised but couldn't afford. Merkel and Tsipras both have just been trying to deliver the mandates given them by their electorates.

Why should one democracy carry more weight than the other? The fundamental problem isn't that one or the other country is right, but that they are both shackled together in a system (the EU) that can't accommodate the democratic wishes of both Greek and German electorates. The way to solve it is not to disregard the wishes of Greeks or Germans, but to unwind the EU so both Greece and Germany can organise themselves as they wish.

LurkingHusband Wed 15-Jul-15 11:49:00

The world has moved on.

Greece will get debt forgiveness when - and only when - it's creditors are able to explain to all their other debtors why they're not getting the same deal.

Now just because I can't think of a way for that to happen doesn't mean it doesn't exist. And if anyone can crack that nut, it'll be the combined brainpower of the ECB/IMF/EU hmm.

Imagine if your bank wrote off your neighbours mortgage because they were having a hard time repaying, what with the holidays and new cars, but insisted that you carry on repaying (effectively subsidising your neighbours).

Now imagine how your bank could sell that to you, and keep you happy. If you can do that, you can answer your own question smile.

ReallyTired Wed 15-Jul-15 12:16:55

"
Imagine if your bank wrote off your neighbours mortgage because they were having a hard time repaying, what with the holidays and new cars, but insisted that you carry on repaying (effectively subsidising your neighbours)."

If my Neighbours were repossessed then I would hope the council would find them emergency housing. If they lost their job then I hope that the safety net of social security would stop them starving. There are Greeks on the edge of starvation. From a selfish point of view it is not in our interests for law and order to break down in Greece.

Banks write off hopeless debts all the time. Our banks nearly collapsed because of a whole set of stupid lending decisions. What else do you think happens when someone is legally declared bankrupt or a company goes under? Sometimes writing some debt off means that 50% of the orginal debt is paid, which banks know is better than nothing.

If an ecomony had to pay too much interest to service a debt then it becomes strangled.

LurkingHusband Wed 15-Jul-15 12:18:19

Ah, so you are willing to bail Greece out ?

How much have you given already ?

Metacentric Wed 15-Jul-15 12:28:05

There are Greeks on the edge of starvation.

Or so it is said, anyway. Actual evidence of it seems to be rather harder to come by.

But accepting for the moment that the claim is true, there are large numbers of Greeks who are most certainly not on the edge of starvation. For example, the middle class professionals who think paying tax is for the little people and who have mortgage payments substantially larger than their declared gross income. Perhaps they might consider stepping in to help their starving neighbours before we ask pensioners in the UK and low-paid workers in Germany to accept responsibility instead?

WankerDeAsalWipe Wed 15-Jul-15 13:04:16

Given that a lot of the people I have seen interviewed don't seem to think that they have done anything wrong or have any inclination to change then no, I don't think they should have debt write off. I don't believe in that for individuals either (except for those that have been conned or were unable to make debt decisions) People need to be held personally accountable.

I wasn't one of the spendthrift that got this countries economy into issues either but that doesn't stop me being held accountable for measures to reduce the overall debt etc - that's just the way it is.

I also don't think it's fair for low paid workers, pensioners and people working past retirement ages in countries such as Germany etc to subsidise Greece to allow people to retire early on high pensions.

I think the Greek people need to suck it up and if the wealthy Greeks sitting in their yachts avoiding tax, loved their country and their people as much as they say, then they can start digging in their pocket.

It's a shame that it ends up being the poorer elements of society that suffer but that has always been the case in every country and it's up to the rest of that country to support them baring actual disasters in third world countries.

Maybe we could divert some of the money being given to India, a country managing to run a space programme, and divert it to charitable organisations closer to home, including Greece? Maybe Greece could sell some of the vast amount of tanks they have accumulated?

Which additional benefits and services shall we cut in the UK to bail out Greece? A blunt question but one that politicians will be thinking about. How can a government justify that to voters.

There are lots of countries cutting back and lots of ordinary people suffering in Europe.

Metacentric Wed 15-Jul-15 13:25:38

Never mind tanks, Greece have more front line fast jets than either the German airforce or the RAF, and that's with us and the Germans in the midst of introducing Eurofighters and retiring Panavia Tornados. Once that programme is finished in a couple of years Greece will have more fast jets than the RAF and the German airforce combined.

I guess it might make for good local politics to pretend that they are at risk of being invaded by Turkey, or something (an external enemy is always useful for bad governments) but seriously, this is an expensive penis extension luxury.

tu quoque comments about Trident would be interesting if the UK were currently seeking debt relief and a massive bailout; as we aren't, it's irrelevant.

Metacentric Wed 15-Jul-15 13:26:29

Greece is a country in which television presenters get their pensions at fifty because of the germs they are exposed to on microphones. They can pay their own fucking debts.

Viviennemary Wed 15-Jul-15 13:28:53

I don't think they should get any debt relief. I think they've got a lot more money than they're letting on. If they want low taxes and a huge welfare state then they can pay for it themselves. It's a great big con IMHO. Why should the UK suffer with austerity to fund their fast jets.

GatoradeMeBitch Wed 15-Jul-15 13:34:56

I also don't think it's fair for low paid workers, pensioners and people working past retirement ages in countries such as Germany etc to subsidise Greece to allow people to retire early on high pensions

Germany itself has a history of not replaying its debts. There was an agreement (The London agreement?) to wipe out their postwar loans. They get away with whatever they can, while insisting that others (like France) repay in full. They're hypocrites.

Metacentric Wed 15-Jul-15 13:49:24

There was an agreement (The London agreement?) to wipe out their postwar loans.

Germany had precisely no negotiating power at the time, but nonetheless made a case which other countries were willing to listen to. If Greece had negotiated in good faith starting six months ago, that might have been possible for them, too. Instead they got an incompetent polytechnic lecturer to posture with his "game theory" and called a referendum to waste time during which period the banks closed for lack of cash. They are now attempting to convince the counterparties that the electorate will accept terms that they have just explicitly rejected.

If someone comes to you with a plan for reconstruction and asks for debt forgiveness as part of a coherent scheme, you listen.

If someone comes to you and shits on your doorstep, tells you you're a terrorist and then demands the debts written off because you all smell of poo, you treat them like children who need discipline.

Which of these techniques was Greece's intellectual finance minister keener on?

ReallyTired Wed 15-Jul-15 14:19:19

Greece needs change and some of that change is unpopular. They should have the same retirement age as most European countries. Certainly they need to crack down on tax evasion.

It's unlikely that Greece will pay back what it owes. Partial repayment is better than no repayment. I feel that the latest bailout plan will just make the situation worse.

LurkingHusband Wed 15-Jul-15 14:43:59

I feel that the latest bailout plan will just make the situation worse.

The only stable way forwards is for Greece to abandon the Euro (or vice versa). If they had done that 2 weeks ago, they'd already be in a better place than now.

OneFlewOverTheDodosNest Wed 15-Jul-15 15:31:30

I think that there needs to be an element of pain taken on behalf of the lenders for making fiscally irresponsible lending decisions. I think this will happen if Greece leaves the Euro and Germany et al see their repayments devalued by the return and pretty hasty devaluation of the Drachma.

I think not being part of the single currency will also mean that Greece will have to focus on raising funds through taxation anyway once they find the money markets officially closed to them.

Metacentric Wed 15-Jul-15 15:42:10

I think this will happen if Greece leaves the Euro and Germany et al see their repayments devalued

Why? Bond holders are entitled to payment of the coupon on Euro-denominated bonds in Euros. If Greece doesn't pay, in Euros, then they are in default. It's Greece's problem how they obtain the Euros, and if they're very expensive to buy in monopoly money new Greek currency, that's not the bond-holders' problem.

Argentina and other South American countries sell bonds in dollars, so that (a) they assume the exchange rate risk, rather than the lender, who would charge for it massively and (b) they obtain dollars for trade without having to export. If they can't buy enough dollars to pay the coupon and eventually redeem the bond in dollars, they they are in default.

BarbarianMum Wed 15-Jul-15 15:47:25

Yes, I agree with you, but only if they are first prepared to make the very unpopular changes necessary to the way the country is run. So no more early retirement, no more overstaffed, overpaid civil service, less corruption and less tax avoidance.

They could also stop blaming everybody but themselves for the mess they are in. In a democracy everyone bears some accountability.

LurkingHusband Wed 15-Jul-15 15:51:17

In a democracy everyone bears some accountability.

Very true. Something we should bear in mind in the UK.

Caboodle Wed 15-Jul-15 19:18:19

Greece should never have been allowed to join Eurozone; it never truely met the criteria.
Germany and France broke the Stability and Growth pact long before Greece.
Germany has benefited hugely from undervalued Euro whilst poorer countries have had their export growth stifled because, for them, it is over-valued...but...
Greece has to start collecting some taxes. Reduce pension spending. Sort out the public sector. So far ir has been unwilling to do so (and unable also to a certain extent-a functioning asministration that can collect taxes, and a culture change so people are willing to pay, don't appear overnight.)
There will have to be some debt forgiveness...it will never repay the debt at current level of GDP. As always, compromise will be needed (and Merkel desparately needs votes so she will go popularist with this-ie come down hard on Greece).

Downtheroadfirstonleft Wed 15-Jul-15 20:34:31

"I would like Greece to leave the Euro and have help in rebuilding their ecomony. Remaining in the Euro and having high taxes will mean that no one will be able to go on holiday there."

Good to see you've got your priorities right OP. biscuit

Viviennemary Wed 15-Jul-15 21:03:51

This is all going to end badly. That PM has a lot to answer for. Going to the polls and saying a No vote would get them a better deal. It hasn't. They should leave the Euro. This won't end well. They won't stick to austerity. They're already striking and marching and austerity hasn't even started yet. They've been sold a lie. No wonder they're furious. Who wouldn't be.

ReallyTired Wed 15-Jul-15 21:10:01

Greece needs tourism, it drives the Greek ecomony. Without tourism there will be far fewer jobs in Greece. If no one can afford to go on holiday there because of high taxes then they will go deeper into poverty.

EllieFAntspoo Wed 15-Jul-15 21:12:09

Certainly they need to crack down on tax evasion.

If your country's government was corrupt, and used your tax money to provide benefits to themselves, to the detriment of you and your family, at what point would you stop paying your taxes. The only power citizens have to reduce corruption and the size of their government is to cease funding it.

In the case of Greece, the fraud was perpetuated by the EU and the IMF stepping in and funding the corruption against the poeples' wishes. Greece was never eligible in the first place for EU membership, but it was politically expedient to shoe horn them into the fold. Bring in Goldman Sachs to cook the books, and bingo, a corrupt government without the support of its people has legitimacy all anew.

Greece will not be allowed to leave the EU. Not without the hullabaloo being covered up with major distraction elsewhere. We really do need another global war, and we keep trying to get the party started.

outtolunchagain Wed 15-Jul-15 21:12:49

Well the IMF agree with you , the idea that Greece will be able to generate 3.5% surplus of Gdp as per the Euro plan annually for 30 years and each year that it doesn't will be subject to swinging automatic cuts is ridiculous , they could no more generate that level of surplus than I could fly to the moon.

The IMF statement says that they want no more to do with Greek bailout until the eurozone consider debt relief as without it Greece is doomed to recession in perpetuity and no one will get any money . It's all very well to raise taxes but 0% of nothing is a bit fat Zero .

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