"Germany Has Never Repaid Its Debts..."

[handmade34]

Piketty: "Germany Has Never Repaid Its Debts; It Has No Standing To Lecture Other Nations"

http://www.zerohedge.com/news/2015-07-06/piketty-germany-has-never-repaid-its-debts-it-has-no-standing-lecture-other-nations


"One year after Tomas Piketty sold a record number of economic textbook paperweights which virtually nobody read past page 26, once again showing the power of constant media hype, the French economist and wealth redistributor is out and about, this time pouring more gasoline on the fire started by the IMF last week when it released the Greek debt sustainability analysis showing Greece needs a 30% haircut, only to be met with stern resistance by, who else, Germany who know very well that should Greece get a debt haircut it will unleash the European dominoes which not even all the bluster and rhetoric of the ECB can halt.

And while Piketty's book may have sold out in socialist France, it seems Germany did not leave a pleasant taste in the celebrity economist's mouth, and in an interview with Germany's Zeit magazine, translated into English, the Frenchman just made sure he will never sell another book east of the Rhine. Here is the reason why:


When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.

... Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice........."

[tularetom]

1. Germany's WW1 war debt is often cited as a causal factor in the rise of Hitler and the start of WW2

The inclusion of harsh reparations in the treaty of Versailles is usually blamed on the French, who were still smarting from the Franco-Prussian war debt..

I'm not excusing Germany at all, their position is certainly hypocritical given their history, but the motivation for these positions go back centuries.

[Igel]

2. Much was repaid.

Including monies that most had assumed wouldn't be repaid. For example, WWI debt.

Some was forgiven. Some was never "charged"--how do you calculate reparations after WWII? And how do you repay debt in the form of forced labor?

Some shouldn't probably have been considered debt. So Germany had more than its share of Marshall Plan loans; some of them were reformulated as grants, making Germany like most other countries.


However, the bigger point is that Piketty seems to forget that it's not just Germany who's having issues (from his viewpoint the only country that does count is Germany; the only country that should count is France); that while German debt was written down, it was part of a treaty and was negotiated, being in the interests of most of the participants. The debt to be paid off was hefty--and more was added as time went on and Soviet-bloc countries made demands. Piketty also just looks at money; part of the debt "paid off" was in territory and equipment. What was defaulted on was, of course, defaulted on by Hitler; Piketty has trouble seeing anybody much to the right of Piketty as anything less than fascists.

Piketty also forgets that 107 billion Euros of Greek debt was written off a few years ago--all to private lenders, but that was a record write-off and was supposed to be accompanied by some changes on the part of Greece. Oddly, some of those changes are what Greece is now agreeing to ... again.

And that Germany requested, but didn't try to unilaterally impose restructuring. None of this, "Greek voters have spoken, and the Germans, Finns, Latvians, Italians, ... are obligated to do as our voters say." Nor did they just default after WWII or in the '50s and say, "Screw you--restructure or else. You know, the USSR is looking like a mighty fine ally."