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Thursday, October 27, 2016

Thomas Piketty is calling out Germany. The French economist who rose to prominence with the publication of his 2013 treatise on income inequality, Capital in the Twenty-First Century, gave a candid interview to German newspaper Die Zeit, in which he described Germany’s hard line on Greece’s debt as hypocritical and a “huge joke.”

In a 61-to-39 public vote Sunday, Greeks rejected a bailout proposal from European Union leaders that would have kept the country afloat but increased austerity measures, which have already taken a severe toll on the economy since they were imposed in 2010.

The critically indebted country is currently in a standoff with the other 18 eurozone nations, among which Germany is the most prosperous and populous, and has been in a position of de facto leadership in Brussels’ debt negotiations with Athens. At stake is Greece’s continued membership in the European Union, which German chancellor Angela Merkel has said she wants to preserve, but “not at any price.”

That Germany is in a position to dictate terms at all, Piketty claims, is owed largely to the rest of Europe forgiving that country’s own debts after World War II.

“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!” Piketty said in the interview, first published in German and translated into English by Medium’Gavin Schalliol (who took down the post due to copyright concerns). “Germany is the country that has never repaid its debts. It has no standing to lecture other nations.”

Piketty further accused Germany of “profiting from Greece as it extends loans at comparatively high interest rates.” Among eurozone nations, Germany is Greece’s largest creditor. According to the AP and Open Europe, the eurozone holds 60 percent of Greece’s total debt, the International Monetary Fund holds 10 percent, and the European Central Bank 6 percent

Piketty continued:

[A]fter the war ended in 1945, Germany’s debt amounted to over 200 percent of its GDP. Ten years later, little of that remained: Public debt was less than 20 percent of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece.

“Those who want to chase Greece out of the eurozone today,” he warned, “will end up on the trash heap of history.”

You can read excerpts from the interview in English here and the original on Die Zeit

Via Quartz and Medium

File photo: Thomas Piketty in October 2014 ( via Flickr)

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  • Daniel Jones

    Germany says it has learned from World War II..

    But they extend none of the economic mercy shown them, and they disdain the idea of multiculturalism.

    They learned what to say.. and spat on what to do.

    • ikallicrates

      Tallyrand, the French diplomat, is often quoted as saying (about his masters, the Bourbon kings of France) “They have learned nothing, and forgotten nothing”. What he actually said was “None of them have been corrected, none have forgotten anything and none have learned anything. The Germans are today’s Bourbon kings.

  • Theodora30

    Dig by has a longer excerpt. Note how the interviewer keeps arguing without really acknowledging what Piketty is saying. Piketty pulls no punches and it is an amazing interview.

  • The lucky one

    Germany, like the USA, is an imperialist nation that will use whatever tools are at its disposal to subjugate other nations.

    • CrankyToo

      A strong economy, like a strong military, is an instrument of power. Throughout history, powerful nations have used their IOPs to project their power and influence events around the world (so as to further their own national interests, of course). It’s a natural state of affairs which has existed since early man learned to fabricate tools and weapons.

      The only salient question is, “Do leader nations like the US and Germany use their instruments of power (more or less) benevolently or malevolently?” You seem to think we and the Germans are bad actors in that regard. Compared to what other countries? Who are the good guys in your view?

      • The lucky one

        I think it started a bit later than the invention of tools and weapons. It took the ability to accumulate wealth to spur imperialism. Of course it takes power to practice imperialism and ultimately military power to accomplish it. The USA is one of the worst because we have the largest military and our government is completely controlled by corporate interests for which profit is the sole motive. Who are the good guys, I don’t know, all the powerful countries seem to follow that path to whatever their level of power will allow. Probably you are right, it certainly seems that world leaders are stuck in the maturity level of the “terrible twos”. We could take a lesson from Iceland however. They have found the wherewithal to actually punish directly some of the criminals responsible for crashing their economy. A first start toward a less imperialistic path would be to start prosecuting the banksters and CEOs that crashed ours.

        • CrankyToo

          There’s a lot you and I agree on. I absolutely concur with your assertion that “our government is completely controlled by corporate interests for which profit is the sole motive.” Everybody knows that. I also agree with your proposal to prosecute the Wall Street dirtbags who brought us to our knees seven years ago. And I’m sure we’re not in the minority in our thinking in that regard, either..

          But I think it’s too late for us. Capitalism has become so immoral under the yoke of the GOP that I think it’s bound to crash under the weight of its own avarice – and probably take the whole phucking planet with it. Our only hope is a government unified under one party. And since the Repugnicans absolutely refuse to behave like adults, unfortunately, we’re going to have to rely on the bungling and cowardly Democrat Party to save the world. How’s that for deep sh!t?

          • The lucky one

            Yes mostly I agree with you. But I think it’s the immoral capitalists that are using both parties to place the yoke on the system. At one time I would have agreed that it is the GOP but they are just puppets and today the majority of Dems are no better, certainly the Clintons are as corrupt as any of them. I’ve gone back and forth on Obama but his pushing of the TPP convinces me that he is just another corrupt politician in it for the fame and fortune it has brought. It will be enlightening, I hope, for some of his supporters to see how he cashes in when he leaves office.
            The thing with the Clintons is that the GOP has tried so hard to pin BS on them that their real crimes have escaped scrutiny. Maybe that is by design since they and the GOP are corporate lackeys.

      • The lucky one

        “Do leader nations like the US and Germany use their instruments of power (more or less) benevolently or malevolently?”
        I think you know the answer to that question.

        • CrankyToo

          No, I don’t know the answer to that question. I think it’s an equation that’s too fraught with nuance for someone of my limited intellect to comprehend. But, if we can stipulate that (1) the overriding purpose of the exercise of our power is to further our own national interests, and (2) what’s in our best interest is frequently NOT in the best interest of other players, then we have to agree that not ALL uses of our power will be (or even be seen as being) purely “benevolent”.

          On the other hand, somewhat-less-than-benevolent is not the same as malevolent. Let’s face it, you can’t make an omelet without breaking a few eggs.

          All that said, and contrary to your original assertion, I don’t believe the US and Germany are motivated by a desire to subjugate the world, so much as by a desire to LEAD a free world. And having spent 7 years of a military career among “Die Deutsche” (one of the most industrious, forward-thinking and technologically advanced civilizations in the history of civilizations), I’m quite happy to see Germany as the de facto leader of the EU.

          • The lucky one

            “the exercise of our power is to further our own national interests” I think that is where we see things differently. I don’t know enough about Germany to say anything definitively although Merkel’s actions lead me to suspect the same is true there as here. The problem here is that our power is not being used to further our interests, “our” meaning the citizens of the USA. It is being used to further the interests of neocons and the corporate oligarchy, most specifically big oil and arms companies.
            The problem with any one country being the leader of the EU is that they will lead in such a way as to serve their own interests, not those of the union. As you alluded to in your post. The EU was a poorly conceived experiment that is rapidly crumbling.

          • CrankyToo

            I strongly disagree that the EU was a poorly conceived experiment. Besides Germany, I’ve lived in Italy, England and Turkey and I can tell you that back in the day (pre-EU) on a hypothetical daytrip through the Benelux portion of Europe, for example, or parts of Bavaria, one might have to navigate a half-dozen border crossings, and might need to carry 3 or 4 different currencies along the way. With the EU came open frontiers, freer trade, and a single currency, among other things which have probably greatly benefitted the average Continental on the street. And the benefits to the national interest of each member country are multitudinous.

            No. The EU is, and has been, a very good thing for Europe on the whole. And let’s not forget that Europe’s current economic problems have their origin in the disastrous policies of Dubya, Cheney, Paulson and their Wall Street pals.

          • The lucky one

            Well the euro s filing and will fold at some pot. As you say it may be hard to ell ho much the America banksters are responsible. A financial advisor I read had this to say however.

          • ikallicrates

            I agree with most of what you say, except for the part about the EU being a ‘poorly conceived experiment’. The EU was originally intended to be a political union, a United States of Europe modeled on the USA; but national politicians balked at giving up power to a supranational panEuropean government, so the EU never became anything more than a free trade customs union governed by bankers. The financial crisis in Greece (and Spain, Portugal, et al) shows that bankers can’t be trusted to make political decisions, and the EU must either become a political union or it won’t survive.

          • RobertCHastings

            The European Union has failed for many the same reasons that the UN has failed – member nations refuse to surrender their self-interest for the interests of the entire community.

  • rationaloldguy

    Oh, , get real here! Greece has been in this mode of default for about 5 years and they still cannot get their act together! They are a tiny nation with no major global impact and a GDP less than most states in the US.

    Now they want to flip off their creditors for years of bad judgement/planning?

    There is a classic financial saying…. NEVER spend more money to recover sunk money.

    Send Greece into total default and bankruptcy and kick them out of the EU! The rational world does not need whining brats like these people……

    • johninPCFL

      Greece has the position in the EU that Mississippi, Alabama, Missouri, etc. red states have in the USA. Those states take out about 2X what they put in to the fedgov. The wealthy in Greece have also taken Grover Norquist’s rants to heart and simply don’t pay taxes at all, putting the Greek federal budget further into the red. Greece is the national diorama of the US on tea party financial policies.

  • ikallicrates

    An even better example is the ruinous war reparations the victorious Allies imposed on defeated Germany after the Great War (aka WW1). Postwar Germany could no more pay its war debt than today’s Greece can pay its debt, but the Allies refused to compromise. Austerity resulted in depression and the rise of fascism. Are Germany’s neo-Nazis hoping to create conditions in Greece favorable to Golden Dawn?

    • RobertCHastings

      You had best review your history. Germany has YET to pay reparations demanded by the Treaty of Versailles, and were it not for the Marshall Plan, Germany would be one of the poorest countries in Europe. Germany owes the Allied Coalition far more than they can ever extract from Greece, and Merkel’s insistence upon austerity for Greece is, as Piketty plainly states,hypocritical.