Treaty of Versailles.

So you are one of those Germans who, a few months ago, I suggested might be favoring the current treatment of Greece on the grounds that this was what was done to Germany via the Treaty of Versailles! The repetition-compulsion neurosis of Freud: do unto others as has been done unto you.  And my suggestion was dismissed here as being unlikely. By the way, the problem with that behavior is not just that it is unjust, but that it doesn't even work - at least to relieve the anxieties which provoke the behavior.

We never learn. The stupidities of our ancestors we compulsively repeat. But this reminds me of descriptions of my behavior at age 3 with my cousins. My girl cousin was a year older and larger. My boy cousin was my age but smaller. She would hit me and I would hit him! Not very noble, but that is how children are.

The response of visiting on Greece the sort of devastation that was visited on Germany after WW I is, at best, neurotic. Greece never attacked Germany, quite the opposite. And Hitler repaid France in spades for Clemenceau's infamous 'pound of flesh' revanchist treaty. But that didn't stick, so now you want to accomplish by economic means what could not be accomplished by military!  Q.E.D.

Having read accounts of Versailles, including Keynes' The Economic Consequences of the Peace, which reads like a summary of inter war events but was written in 1919, I felt that France, if not the other countries attacked by Germany in the late '30s, had brought a good portion of its disaster upon itself, (by no means to excuse Nazi Germany for its actions).

Thank you for confirming my suspicions.

"It is not necessary to have hope in order to persevere."

Except, of course, you, and me, and just about everybody else understands that Greece is neither able nor willing to ever pay that money back.

Which makes that "loan" what?

It makes that loan a transparently obvious effort to disguise the bailout of the German banks who made bad loans as an attempt to help to feckless southerners one last time to comply with their obligations - at the cost of seriously increasing those obligations and seriously degrading the ability to pay, via the 'austerity' conditions. This makes no sense economically, but plays well politically to the popular press while giving still more claims for which German banks can be reimbursed by foreigners.

The maddening thing about this is that Greece, like Ireland and Portugal, have been foolishly noble about trying to honor their obligations, and, instead of recognizing that effort and helping them do so, this is seen as a justifiable opportunity to make more money off these countries via the 'rescue'. In reality this is most likely to end up simply as one more way for the German financial elite to milk the German public while getting them to cheer on the efforts, as Greece is suffering far more.

This is similar to what lower class whites in the US South long accepted as their final consolation for being screwed over, bankers and plantation owners, officials, etc.: "At least you ain't no nigger!" I come from that background, have rejected that thinking and know with whom I stand. Such manipulation is most pathetic when it is most successful.

"It is not necessary to have hope in order to persevere."

Germany ran "austerity" politics for most of its recent history and yet has one of the most advanced social networks in Europe.

Germany's austerity was a protectionist exercise in which Germany piggybacked on the rest of the Eurozone to pay for the reunification.

Colour me unimpressed.

And of course it won't work for the Eurozone as a whole, because the world outside the Eurozone is not going to let the Eurozone piggyback on their recovery.

Basically, what got us off track, financially,

A creative rewriting of the present. There is no European government finance crisis. There is a European trade imbalance crisis.

were three things: the unsuccessful Keynesian episode in the 70ies,

Historical revisionism. The Keynesian policies in the '70s were perfectly successful at their objective - which was to maintain output and employment.

They were not successful at containing inflation, but (a) inflation doesn't matter, so fuck that. And (b) the '70s inflation was imported and therefore not amenable to fiscal policy solutions.

The point of prudent financial policy isn't a balanced budget per se. Others have noted that one method of dealing with debt is growing out of it (which, fwiw, is only sustainable as there actually is long term growth,

False. The government can simply elect to pay zero per cent interest on its bonds.

And if THAT is austerity, well, its the only long term sustainable policy at all. All other policies lead to the Greek end game.

False. Look at Japan.

The problem with Keynesian reality is that there is no political system that ever managed to implement the "and in boom years we pay back the debt we incurred in a bust period" part.

Because it is totally unnecessary. Governments do not have to pay back their "debt," ever.

- Jake

Friends come and go. Enemies accumulate.

"As a side note - it wasn't abandoned. Treaty of Versailles."

Yeah, well, the treaty of Frankfurt (1871) imposed to France greater payments in terms of percentage of GDP, and it was paid in two year -despite there having been major fighting in France in 1870 against not a single shot on German soil in WW1.

It was a political decision to pretend that Versailles was an economic impossibility.

Germany loves giving debt morality lessons despite having been the worst debt offender of the 20th century.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

Except, of course, you, and me, and just about everybody else understands that Greece is neither able nor willing to ever pay that money back.

Which makes that "loan" what?

Default does not equal lack of eventual payment. You can bet Greece will pay these loans back. I hope you also realize that the amount loaned to Greece so far is 80 billion, 13 billion of which come from Germany.

In all prior defaults, even when the money wasn't loaned to Greece but instead to a Bavarian prince who used the cash for his own purposes, Greece paid the money back (unlike in Germany's defaults) at often incredibly high interest rates (20%+++).

The troika loans have seniority over all other loans, and now we find out the ECB just swapped its bond purchases in the secondary markets for senior notes.

Except, of course, you, and me, and just about everybody else understands that Greece is neither able nor willing to ever pay that money back.

It's not able, yes (it's elites are very willing, it's not like they're going to pay for it) but that realization and the actions that should follow it were never allowed to be articulated, and no policy implications were drawn from it. Quite the opposite, the whole episode was used as a time saving device so the ECB (i.e. the EU taxpayer) could be burdened with the private debt of German and French banks, so it could default at taxpayers expense not the bankers.

Germany ran "austerity" politics for most of its recent history

No. Germany had austerity of the type we're talking here under Heinrich Brüning, AFAIK, and the results of that are well known

But in order to restore a primary budget surplus it's the standard treatment

What? destroying democracy? And why is a primary budget surplus more importance than independence and why does it make mass suffering OK? And again destroying the economy worsens debt and destroys much more than the current economy. One has also to look beyond first order effects...

The road of excess leads to the palace of wisdom - William Blake

cris0:

long term growth, which leftists tend to oppose for ecological reasons)

Does. Not. Compute.

supporting real growth in quality of life for populations well served by their governments, enacting intelligent, especially ecologically intelligent policies are what being a 'leftist' is all about.

supporting the present giveaways to the already rich, plundering resources for short-term gain, these are the bailiwick of the right.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty