to wonder why the eurozone doesn't just

[donteatyourteawithnoknickerson]

cancel out each others debts?

I've just been looking at the BBC news site and each country owes each other - is it too simplistic to ask why they don't just cancel out? For example - I owe you a fiver, you owe me a tenner, so you give me £5 and we're all square, right? Wouldn't this help enormously? Worldwide?

Is there some complex financial stuff I'm not aware of?

yes

The Lets just start again approach!
All a bit beyond me really............

i'm a financial journalist who used to work in the City and the whole mess makes my heas hurt. i am really enjoying maternity leave and just thinking about my children

sorry, not much help. i could write an essay....

"is there some complex financial stuff I'm not aware of?"

I'm going to go with YES.

it is not all soveriegn loans/debt. Alot of the loans were made by various publically held banks and other lending institutions. They are not going to agree to wipe it off their books in return for their countries debts being cleared. If they did their shareholders would revolt enmasse.

The debt is not all between countries, there are individuals and companies holding debt too, they just happen to be resident in a country.

Also, there's interest rate differences - If I lend you 1000 and you agree to pay me 1% interest. And you lend me 1000 and I agree to pay you 10% interest. Whilst we owe each other 1000 pounds, You'd be completely bonkers to agree to just cancel the 1000 debt each way.

Of course with Germany able to borrow at 1.7% it could borrow loads, lend it all to Italy and Spain and Greece at 4%, make itself a huge profit, make it cheaper for the other countries (who are borrowing at nearer 7%) and it would all be sorted. Of course that's only if you believe that Italy etc. will actually pay back its debts but the Germans said they will, so I don't quite get why they don't put their money where there mouth is?

yes, and it's so complex even the so economists, bankers, governments and financial experts haven't a clue how it really works.

This means the 'rules' of global economics need to be adhered to very stringently as if they're broken the entire façade of modern economy will collapse and everyone will realise that there is in fact far more money that there are minerals and real estate to back up the currency (they even have a term for this in economics; fiat currency) resulting in worldwide panic and hysteria and a reversion to medieval bartering systems.

neuro if you can't offer an explanation of the "stuff" either, then to you too.....

I could, but this AIBU, not "complex fiscal theory" section.

That's fine as long as China wipes everyone's slate at the same time.... The amount owed is not solely between friendly nations.

'it's so complex even the so economists, bankers, governments and financial experts haven't a clue how it really works. '

Err, yes we do.

no, but it is an opinion forum. Your answer does not amount to any sort of opinion, intellectual, fiscal or otherwise (apart from just being rude, that is).

It does though. You asked a question, I answered it. Whats your problem?

i am guessing the loans have different interest rates, terms etc.

curby.... you must be a very unique case then, and making millions on the stock market too as there's no-one else on the planet who can fully understand the system well enough to predict the complex manoeuvring of stocks and currencies and the ways in which they react to world events.

The question I asked concerned a possible response to the financial crisis, and the last part was really asking why this can't happen. Obviously I realise there is complex stuff I'm not aware of, but I was wondering what that was. Your response was simplistic and facile. That's my problem.

A simplish answer to why this won't work is that most of the debt is not owed between two parties who can net it off. Countries have borrowed from banks, pension funds and individuals. The money in banks and pension funds lent to countries comes from savings etc. These are owned, generally by the rich, who will lose out if the debt is not repaid.
The problem in Greece is the government has been funding excessive spending through borrowing. This spending has gone on, amongst other things, allow people to retire on good pensions at 50,

Here's a link to a BBC page which has diagrams of who owes what to whom.

Another answer to your question is that the whole financial system, as well as running on amounts of money being moved around is highly dependent upon confidence. If your solution was possible and if those who move the money around were confident that everyone could pay everyone off, meet their obligations and square it all up as easily as you say, then we wouldn't have the panicky situation we currently have. But confidence has evaporated starting with Iceland, Ireland and now Greece, Italy etc. and only when it returns - debts reduced, economic growth forecast, unemployment down, tax revenues up - will we get back to a situation where everyone owes everyone else but it's not a big deal.

Your idea was simplistic and facile, hence we are even. You might want to pull the rod out of your arse if you're going to survive in aibu.

Don't take any heed of the sarky comments OP, some people just need an outlet it seems.
pity we haven't this calibre of sheer unbridled brainpower & expertise in, say, Brussels where it could do some good, eh?

maybe OP should become chancellor of the exchequer? Couldn't do a worse job I suppose.

I think the entire currency system should be abandoned, and each country should just barter with their strong points.
Greece could offer island getaways in return for German Bratwurst and a decent car.
France could offer lessons in insouciance accompanied by copious amounts of vino.
The Spanish could trade their fiery little coffees and show the Dutch how to chuck an epic tantrum.
The Brits could show people how to queue, say sorry and make endless chit chat about the weather. Oh, and organise everyone according to an incomprehensible to an outsider class system.
I think this system would work far better than a failing currency and is in no way stereotypical or unreliable.

I think it's because the debt is not mostly being held by governments.

For example, I have a savings account. I don't know the details, but I wouldn't be surprised if the money I have saved in that account hadn't been invested in sovereign bonds by my bank - if they're going to pay me interest they have to invest it somewhere, and it has to be somewhere sure, because they have to give me back my money if I ask for it.

So up to a certain point you could argue that (for example) Italy has borrowed indirectly from me. And cancelling France's government debt will not make me happy about losing my savings because I am not France.

But maybe this is nonsense, I'm not an economist.

This is fascinating. It is going around on FB at the mo so is interesting to get other viewpoints.