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MattHamilton Nolan
7/06/15 2:12pm
I love that last line. Seriously, why is this not a talking point when anyone brings up economic issues in this country? Why is always the borrower that has to bear the full brunt of their bad decisions and not the lender who probably knew better than to lend to certain people in the first place?
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  MiniatureamericanflagsforothersMatt
  7/06/15 2:17pm
  To build on this, isn’t that part of the interest rate calculation? There is a greater probability that you won’t pay this back so I charge you +4% interest.
  
  Greece’s creditors got it wrong. Womps for them.
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  MattMiniatureamericanflagsforothers
  7/06/15 2:21pm
  Yeah, I'm pretty sure that's how it works for credit in general. The greater a risk you are that you'll flake, the higher interest you pay. In a way it almost seems counter intuitive. Like why make it more expensive for people who might already be a flake risk in the first place? If they're that risky, then it's probably better to just not lend to them at all.
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youjustkeepthinkingbutchHamilton Nolan
7/06/15 2:09pm
As I think you can see from the comments below, HamNo, almost everyone DOES see it as a moral issue—but, unfortunately, more along the “Greeks are all lazy scum who have too much social welfare” king of moral issue. I particularly like the comment from the guy thinks that somehow Greek’s debt is worse because it was not accumulated in a war conducted by them on other civilized nations. That pretty much sums it up, I think.
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  Hamilton Nolanyoujustkeepthinkingbutch
  7/06/15 2:17pm
  Obviously Greece’s government DID blow borrowed money irresponsibly, but it also seems pretty clear that history and the case at hand both show that there is only a tenuous connection if any between irresponsible actions of leaders and the willingness of a nation of millions to suffer long term penury to pay back creditors who are far better off than they are already.
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  Dolemiteyoujustkeepthinkingbutch
  7/06/15 3:12pm
  You are neglecting the rampant tax evasion, corruption and mismanagement of the country for decades. It’s not just that they went broke, but none of them have been paying their taxes. It’s like giving money to the family next door because the kids are starving, but the dad pulls into the driveway in a brand new Escalade. Then you tell him he should buy his kids some food, and he says, “look, just give me that check, and don’t tell me about “austerity”.
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cepalgHamilton Nolan
7/06/15 2:11pm
A quick reminder to all the sound, financially conservative American patriots who find the idea of debt forgiveness unholy and unnatural.

The United States of America has never paid the French back for the loans they gave us during the Revolutionary War. It was only courtesy of John Adams burning every single one of his political bridges that the first state of war declared by the Constitutional Government of the United States of America was not declared in the aftermath of the XYZ Affair, on the grounds “fuck you, we’re not paying, neener neener.”

Always important to watch for that board in your own eye before you start up splinterchat.
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  Archdukerycepalg
  7/06/15 2:21pm
  We paid the French back in freedom. The monarchy pissed the country’s money away (including in loans to us), ruined the economy, created high unemployment and kickstarted the French Revolution.
  
  And then the icing on the cake was WWI and WWII. I’m pretty sure we’re even on the balance book.
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  QCICcepalg
  7/06/15 2:24pm
  There were some things happening in France you may have heard of. They involved guillotines and the death of the people who had loaned us the money and helped us.
  
  For instance the Marquis de Lafayette who Washington and the US people adored and who was instrumental in the early years of the French revolution, was eventually branded a traitor and chased out of the country. We did good by people like him, not the rabble which took over there.
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kidfrijolesHamilton Nolan
7/06/15 2:15pm
The moral element is irrelevant. Auserity isn’t about punishing the Greeks, it’s about leading them to the economic, social, and political changes they need to make in order for growth to be possible. Change hurts! And change needs to happen; pumping more money into Greece will just result in it being squandered.

I think the social change may actually be an important part? A statistic that gets tossed around alot is: 50% unemployment among young Greeks. Crazy town!@! But these are EU citizens; they can get a job anywhere in the EU, right? Why are they not going out and getting a job someplace else? When I do work in europe, when I talk w/ european friends, this kind of thing seems common enough for other EU nations. Certainly moving around in the states for employment is common. Why can’t Greeks do it?
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  Hamilton Nolankidfrijoles
  7/06/15 2:22pm
  While the Greek government and its financial habits clearly need reform, austerity does not work. Meaning it does not even accomplish its own stated goals.
  
  Since it doesn’t work, another path is necessary.
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  ReburnsABurningReturnsHamilton Nolan
  7/06/15 2:42pm
  Actually it can work plenty fine. At some point, the Greek economy will find it’s own footing. At some point, investments will become cheap enough that they attract private capital. That point won’t be one that many Greeks are happy with at first, and many of them will suffer horribly and even die while doing so, but that footing would absolutely be found.
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ThrumbolioHamilton Nolan
7/06/15 2:05pm
When debt reaches the point that paying back would severely damage the economy of the nation being asked to pay it back—or when the payback might extend longer than a single generation, with the debt burden of past fools being shifted on present strivers—it is probably time to get more flexible about payback terms. Otherwise, people tend to start breaking things.

Not even a moral issue here, IMO. Pure practicality.

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  MattThrumbolio
  7/06/15 2:15pm
  It's like medical bills. I pretty much set the terms for them. I love when hospitals think that they're going to get me on a 12 month repayment plan for a $10000 surgery bill. Why yes, I do just happen to have a spare $833 a month to put towards a bill. Then I laaaaaaugh and laaaaaaugh and tell them I'll send them $50 a month.
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  Negative, I'm a Meat PopsicleThrumbolio
  7/06/15 2:26pm
  Precisely. Though I agree with the moral issue as Piketty lays out, it’s the practical aspects of the creditors logic that baffle me. I’m not sure what the creditors are really expecting. At this point it’s like extracting blood from a stone. Obviously the Troika’s previous plans of austerity aren’t working, not sure what they expect this time without restructuring the debts. The country is in a tailspin; I’m not sure keeping your foot on their neck is going to get you your money back, ever.
  
  Remember that those who extend too much easy credit are just as foolish as those who accept it.
  
  It takes two sides to make shitty loans. It’s time for the IMF and the Eurozone to own up their part.
  
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festivusaziliHamilton Nolan
7/06/15 2:10pm
Honest question: Does Greece collect enough taxes to run its government if it did not need to make loan payments? Phrased another way: if Greece’s creditors granted it complete forgiveness of its current debts, would it then be a viable economy? Or would it require continuing loans?
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  ARP2festivusazili
  7/06/15 2:17pm
  Without restructuring their economy (collecting taxes, reducing corruption, and streamlining government/pensions), they would eventually fall back into the same trap. That’s why debt forgiveness needs to be a bargain.
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  destor23festivusazili
  7/06/15 2:20pm
  I believe it would still need financing in addition to taxes.
  
  http://www.ft.com/intl/cms/s/0/6…
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Four-ring-circusHamilton Nolan
7/06/15 2:30pm
So here’s the situation:

Group runs up debt levels, makes terrible investments, cooks the books to make the picture seem rosier, and sells that rosy picture to future and current investors/creditors.

Everything goes pop and group is now basically bankrupt. Do we forgive the debt? What about moral hazard and more groups spending and investing recklessly and then going to sugar daddy to get bailout?

But HamNo of course says we should forgive the debt of the reckless group.

Now replace “group” with “too big to fail bank”. You still think we should forgive the debt HamNo?

This situation is very sticky. I don’t see austerity working here. Unfortunately a debt forgiveness can lead to Spain, Portugal, and/or Italy looking for the same down the road. I think the EU has a right to tell the Greeks to get their shit together, but both sides need to come back to the table and haggle out a partial forgiveness in exchange for some concrete signs that Greece might actually run the country like a real government, not some crooked banana republic. The referendum only makes the Germans and the rest of the EU to want to tell the Greeks to fuck themselves- unfortunately the Greeks don't quite realize that they are in the weaker position here.
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  Hamilton NolanFour-ring-circus
  7/06/15 2:53pm
  You don’t have to forgive their debt if you think it causes too much moral hazard, you can let them walk away from the euro and print money to pay their debts. At this point the rest of Europe seems more concerned about the consequences of a Greek exit from the euro than the Greeks do.
  
  I’m sure you’re smart enough to understand why you can’t compare a private bank to a country when discussing debt.
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  Four-ring-circusHamilton Nolan
  7/06/15 5:34pm
  The drachma will have zero value. They can print as much as they like and still not have a negligible impact.
  
  And you are correct that it’s difficult to compare a bank to a country. That’s the crazy thing here- a bank can try to issue more stock or go to the credit markets for cash, but a country like Greece already has a supposedly foolproof way of raising money- the power of taxation. But they screwed that up too.
  
  There are a lot of precedents for debt forgiveness here. You have an argument. But I think that there needs to be some major strings attached to that forgiveness. The elections that put Tsipras in as PM and the subsequent referendum shows me that the Greeks are still blaming everyone but themselves here and therefore there needs to be more change.
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JohannesClimacusHamilton Nolan
7/06/15 2:05pm
While I love Piketty, and while Germany may be hypocritical on a certain level, the debt Greece is refusing to pay back has nothing to do with war. It has to do with Greece’s inability to administer its tax laws and its poor economy due, in part, to that same inability to raise tax revenue to reinvest in the public. Greece has a bloated welfare state, poor productivity and an inept government. They simply can’t survive without a fiat currency they can devalue at will.
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  Pie SnatcherJohannesClimacus
  7/06/15 2:12pm
  Shush, you. There’s no room for reason in a HamNo piece.
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  larryherkimerJohannesClimacus
  7/06/15 2:13pm
  Perhaps this is not what you meant but your comment seems to imply that if Greece had acquired debt because they invaded their neighbors, killed millions, and then lost a war then forgiving their debt has a higher morality than the fact they just overspent and undertaxed.
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KilometersAustinHamilton Nolan
7/06/15 2:04pm
“All Debt is Negotiable”

I have a feeling these student loan people are gonna feel differently about this
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  MattKilometersAustin
  7/06/15 2:19pm
  Literal worst case scenario for that is a garnishment of wages and even then they’re not going to take the majority of your check. They may garnish up to a few hundred dollars if you’re making the big buck but most likely it’ll be something reasonable. Also, you’d be surprised at how flexible a lot of student lenders are. At the end of the day, most lenders are pragmatic and they're going to go "I can either get this guy on the hook for $30 a month for the next 50 years which he'll almost certainly pay, or I can be a hard ass about it, demand $500 a month from him, which he almost certainly won't pay, ever, and then I'll have to take him to court to garnish his wages, in which case I'll be lucky if the judge sets the garnishment as high as $100 a month".
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  QCICKilometersAustin
  7/06/15 2:25pm
  Most student loans have economic hardship forbearance and deferment options.
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ThePriceofEggsinMaltaHamilton Nolan
7/06/15 2:06pm
All debt is negotiable... except for student loans, which are written in stone and signed with the blood of your co-signers.
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  QCICThePriceofEggsinMalta
  7/06/15 2:26pm
  Most student loans have economic hardship forbearance and deferment options.
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