Germany: Biggest Debt Transgressor of 20th Cen

[marshabar1]

Think Greece's current economic malaise is the worst ever experienced in Europe? Think again. Germany, economic historian Albrecht Ritschl argues in a SPIEGEL ONLINE interview, has been the worst debtor nation of the past century. He warns the country should take a more chaste approach in the euro crisis or it could face renewed demands for World War II reparations.

From 1924 to 1929, the Weimar Republic lived on credit and even borrowed the money it needed for its World War I reparations payments from America. This credit pyramid collapsed during the economic crisis of 1931. The money was gone, the damage to the United States enormous, the effect on the global economy devastating.

SPIEGEL ONLINE: The situation after World War II was similar.

Ritschl: But right afterward, America immediately took steps to ensure there wouldn't be a repeat of high reparations demands made on Germany. With only a few exceptions, all such demands were put on the backburner until Germany's future reunification. For Germany, that was a life-saving gesture, and it was the actual financial basis of the Wirtschaftswunder, or economic miracle (that began in the 1950s). But it also meant that the victims of the German occupation in Europe also had to forgo reparations, including the Greeks.

SPIEGEL ONLINE: In the current crisis, Greece was initially pledged $110 billion from the euro-zone and the International Monetary Fund. Now a further rescue package of similar dimensions has become necessary. How big were Germany's previous defaults?

Ritschl: Measured in each case against the economic performance of the USA, the German debt default in the 1930s alone was as significant as the costs of the 2008 financial crisis. Compared to that default, today's Greek payment problems are actually insignificant.

freeinternetpress.com/story/Economic-Historian-Germany-Was-The-Biggest-Debt-Transgressor-In-The-20th-Century-30732.html

[floodofsantorum]

I read the title and thought that somehow Germany is a debtor nation these days. Thankfully not.

Germany is taking the hard line on Greek sovereign debt. France doesn't care. Germany's position is super conservative, fiscally speaking. It will ruin the lives of many Greeks. It will also make the worldwide recession longer. However, Germany is in very good shape, so it doesn't care.

[hello fromWarsaw]

France paid back the huge reparations after the Franco-Prussian War. The Germans were welchers after WWI. Churchill blamed the Americans too- too many loans, ruined the League (pubs actually).

[marshabar1]

SPIEGEL ONLINE: You're saying that Germany should back down?

Ritschl: In the 20th century, Germany started two world wars, the second of which was conducted as a war of annihilation and extermination, and subsequently its enemies waived its reparations payments completely or to a considerable extent. No one in Greece has forgotten that Germany owes its economic prosperity to the grace of other nations.

SPIEGEL ONLINE: What do you mean by that?

Ritschl: The Greeks are very well aware of the antagonistic articles in the German media. If the mood in the country turns, old claims for reparations could be raised, from other European nations as well. And if Germany ever had to honor them, we would all be taken the cleaners. Compared with that, we can be grateful that Greece is being indulgently reorganized at our expense. If we follow public opinion here with its cheap propaganda and not wanting to pay, then eventually the old bills will be presented again.

SPIEGEL ONLINE: Looking at history, what would be the best solution for Greece -- and for Germany?

Ritschl: The German bankruptcies in the last century show that the sensible thing to do now would be to have a real reduction of the debt. Anyone who has lent money to Greece would then have to give up a considerable part of what they were owed. Some banks would not be able to cope with that, so there would have to be new aid programs. For Germany, this could be expensive, but we will have to pay either way. At least Greece would then have the chance to start over.

Interview conducted by Yasmin El-Sharif

www.spiegel.de/international/germany/0,1518,769703,00.html

[txbo]

Well if the Greeks didn’t feel that they could retire at age 52 and live off the government they may be able to come out of this. In addition, the Greeks are notorious as tax cheats, I don’t feel sorry for them they need to cleanup the mess they created.

[txbo]

Jun 21, 2011 19:51:14 GMT -5 hello fromWarsaw said:

France paid back the huge reparations after the Franco-Prussian War. The Germans were welchers after WWI. Churchill blamed the Americans too- too many loans, ruined the League (pubs actually).

Fact check. Germany made the final WWI war reparation payment Oct.3, 2010. The total payment for reparation was 132 Billion Reichsmarks equivalent to some £22billion. It was paid mostly to Britain, France and America as compensation and punishment for the 1914-18 war.

[marshabar1]

Complicated world. I do know that hardly any homes in Greece are finished. You only start to pay tax when they are finished so there is always some rebar sticking out somewhere. Socialism sucks. ;D