On Thu, 26 Mar 2015 06:50:26 -0500, jim "
wrote:

Ed Huntress wrote:
Greece could pay its debt -- if it wanted to, in the opinion of many
experts. That's what has the Germans so hopping mad:

Why should Greece want to?

They're not stupid. They know the Germans
greater debt makes Germans richer. Why should
the Greeks impoverish themselves by doing what
Germans won't do because Germans also don't want to.
Neither the Greeks or the Germans want to
become poorer by paying down their national debt.

I hesitate to get into these debt discussions, because they usually
hit a brick wall sooner or later, but Germany vs. Greece is a
relatively simple issue.

Germany, like the US, the UK, Switzerland, the Scandinavian countries,
and every other developed economy, keeps paying off its government
securities and then selling new ones. In other words, it keeps rolling
its debt over, generally with no problems.

Greece, on the other hand, got a bailout, and now they want to
re-negotiate the terms under which they'll pay it off. That isn't the
same thing. Their economy is pretty weak to begin with, and the
austerity that would be imposed by paying off the debt would, they
say, be onerous and would prevent their economy from recovering,
because there would be a shortage of capital and a big shortage of
consumer spending.

Beyond that simplistic set of facts, there are other, more complicated
ones. The euro zone economies are not something I follow closely, so
this is as far as I can go with it.

To give you an idea of how much all of this upends common sense, note
that Luxembourg, a tiny country with a very successful economy, has a
per-capita external, national debt that is THIRTY-FOUR TIMES that of
the United states. How do they manage that? By holding comparably
large amounts of the debt of OTHER countries.

Why would they do a thing like that? Largely as a hedge. And that's an
important part of the whole international debt-swapping scheme, which
makes good business sense but no "common" sense at all.

--
Ed Huntress