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Schaeuble’s platitudes:”Greece’s debt problems because the country lived far beyond its means in the past”

Well… German Finance Minister Wolfgang Schaeuble is disappointed by the Greek government… And after five years of crisis, he came to the stunning conclusion that “the reason for Greece’s debt problems was that the country lived far beyond its means in the past.

He said on Monday that “the new Greek government destroyed all the trust that had been rebuilt in the past.”

Speaking at a panel in Berlin, Schaeuble also said that he did not expect Athens to keep its election promise to introduce higher taxes on ship owners. “Even a radical leftist government won’t keep that promise,” the conservative minister said.

Schaeuble reiterated his view that the reason for Greece’s debt problems was that the country lived far beyond its means in the past.

OK. We have heard this platitude by Schaeuble quite many times since 2010. Nothing new, nothing important and nothing thoughtful. And nothing, not a single sentence adding solution to the problem.

Anyway, Schaeuble made his point, just a couple of hours after chancellor Angela Merkel had spoken with Prime Minister Alexis Tsipras and invited him to Berlin.

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17 comments

  1. There is a solution in that response. Fix the dysfunctional tax system, fix the political infrastructure, fix the abysmal situation in terms of economic law, how easy it is to start a business and so forth.

    As far as I understand there are plans to address these issues, but I have not found anything that seems concrete. Maybe you know more about this.

    • Why “fix the dysfunctional tax system”? Taxes should be voluntary. If the
      government provides valuable services at a better price than it’s competitors
      then people will gladly pay for a good service they use. If their competitors
      provide good or better services for a better price for those services then
      people will pay those other companies for the services they use. Why should
      government have a monopoly on services that people want? The government is
      like the mafia forcing people to pay them for a product they may not want or
      for a bad product. It’s criminal.

      • Fair point – would be fine if it worked.
        But you can’t rely on other countries taxpayers to bail you out if it doesn’t…

        • Not asking other countries to pay. Obviously if I’m saying people should and would pay for the services they find valuable themselves then that means not other countries.

          Some things to remember about what you brought up. Part of the debt is illegal. Part of the debt, some say 200 billion euros, in order to bail out those speculators. After German politicians decided to push the bets speculators made to the German people (obviously Germany’s speculators exposure is not the total amount). They did the same here in the USA when instead of letting the investment firms fail they made the taxpayers pay for them.

  2. Wow, Wolfie has shown the ability to catch a blinding flash of the obvious – debt is a product of spending more than you take in. How unfortunate that he still refuses to see that his beloved “Austerity Plan” has caused more double the human and economic toll he predicted five years ago. Seems he can selective remember and apply things from the past, as long as they do not cast aspersions on him. Perhaps his necktie cuts off upward blood flow?

  3. Always a distraction from the truth. It’s the banks’ greed who live way beyond its means. Everything else is just a distraction to make us fight among ourselves.

    • In Greece’s case the state bankrupted the banks, not the other way around(though that is usually the case).

      • The banks were fine and survived 2008 without problems because they were old fashioned banks with 70% deposits and 30% investment in shipping and other value creating products. Almost no toxic debt / derivatives.

        It was Merkel’s PSI 1 and 2 that destroyed Greek banks.

        • Only that the Greek banks had lent about 30 billion Euros to the Greek state, which it could not pay back. Which resulted in massive liquidity problems during the crisis. If things were as you describe them, there would have been no need to transfer money to said banks.

          After all Greece needed, according to it’s own information, money to recapitalize their banks, about 48 billion euros.

          So which is it? Were the banks fine? If so why would Greece need a recapitalization tranche? Also if the greek banks were fine, why did most of the money go to the geek banks again? Oh right, to pay off their debt.

  4. costa sakellariou

    when will the politicians accused of graft stand before the courts and the nation? when they are found guilty in a court of law, and their assets seized, then there will be change in greece!

    unfortunately, i don’t see this happening…

    • Blame the former coalition for scheduling the Greek Eurogroup meeting 10 days after the election, knowing SYRIZA would win; and blame Eurogroup for its Make Work policies to distract the new government up until the April deadline, refusing all the way. A planned crisis. in light of SYRIZA’s mandate.

      Meanwhile wait & see.

  5. Let Greece exit the Euro , let schauble expalin the german taxpayers that they will have to pay for the german banks …

  6. the question is not what happens in march , but what will happen in July and in the coming years , Greece will not be able to pay in full

    It is better to exit now

    • That would destroy Greece, since they would also have to leave the EU thus would lose a significant advantage over other southern countries. The reason being that capital control is against european law, as Varoufakis explained it some time ago perfectly. Plus the new currency would most likely drop somewhat close from 30% to 60% of the current euro value, instantly DOUBLING their debt. Add low investor interest and great economic risk on top of that and Greece will be completely on the ground.

      What little advantage they could be getting from building up domestic trade would instantly implode and the humanitarian crisis would further escalate. The country would struggle, probably for decades before it would even get back on track, orderly exit or not. Greece would turn into a third world country, though some already regard them as such. Some Greeks might think things can’t get worse and it is worth the risk but these people have no idea, it can get worse, way worse.

      Telling them to leave the euro is the same thing as telling them to hang themselves with a rope.

  7. You accept that the Greek state lived beyond its means, but you refuse to acceptance the only working remedy against it – austerity. A contraction of your economy until productivity and expenses are in a reasonable relation again.

    And no – you will not grow out of your debt with civil servants and by offending foreign investors.

    A very small example: between 2000 (introduction of Euro) and 2008 (debt becam unsustainable) – the average annual gross salary in Greece DOUBLED.

    The difference between what you consumed and what you created in value was debt.

    For decades the Greek state was not able to balance its budget. – The culprit now? Schäuble.

    Ask Romania, Bulgaria, the Baltics and Slovenia, Slovakia and the Czech republic what they think of your explanation model. They have a higher productivity and lower expenses – publicly as well as privately.

    • Heh, funny. Austerity is the only working remedy? Would you advise a worker to try to pay his mortgage off by selling his tools? The only viable solution is investment, not austerity. That’s just a neo-liberal agenda so impoverish workers and facilitate the cheap acquisition of capital. It’s so obvious it hurts.

      This era of politics masquerading as “non-politics” and There Is No Alternative is running out of road.