Reply To: Austerity has failed. An open letter from Piketty to Merkel

[Arcus]

@Unseen

There are a few cases to consider.

The background of the 1953 debt accords came 8 years after the war, when Germany was under occupation and management by the Allies, including having a constitution and massive social and legal reforms imposed. The country had also been split, lost territory, taken in 10% of its population as refugees, and had portions of its means of production carted off. Furthermore, it had imprisoned or executed many of those responsible for WW2.

The German debts were written down in 1953 by about 50%, from about 60%age points of GDP to 30% (from 32bDM to 16b, with a GDP of 55b). By comparison, Greece public debt stands at over 170% of GDP, and will need to be written down by 50-80%.

Greece was awarded war reparations in the Paris Peace Treaties of 1947. After the war the Greeks took 30.000 tons of machine equipment and let 18.500 rot and rust in Hamburg and shipped the rest to Piraeus. Lastly, Greece accepted further compensation in 1960 for a war time loan.

If Greece is willing to go through the same ordeal as Germany after the war – an ordeal well reserved by the Germans mind you – then they may get a similar deal. But even that won’t be enough to save Greece, and they certainly don’t have a leg to stand on when it comes to blaming the Germans for their predicament.