STUMP » Articles » Germany and Greece: Great Expectations » 4 February 2015, 05:23

Well, some socialists (or whatever) got elected into government in Greece and have been making noises about the debt.

Germany has something to tell Greece:

In her first interview since Syriza won the Greek election last weekend, Angela Merkel has made it clear the debt stands but she hopes they stay in the eurozone.

The far-left party stormed to victory last weekend with 36 per cent of the vote, promising to ditch austerity and renegotiate the country’s £180billion bailout from the European Union, the European Central Bank and the International Monetary Fund – also known as the troika.

Their finance minister Yanis Varoufakis has said this troika of global institutions is “rotten” and has refused to work with them to renegotiate bailout terms.

Syriza is now beginning to roll back on the austerity measures imposed by the EU on the previous administration in exchange for the loans.

However this morning the German Chancellor said that while Europe will continue to show solidarity with Greece and other nations hit by Europe’s debt crisis, the debts must be repaid in full.

HA HA HA

Oh wait.

She wasn’t joking.

To quote from Our Mutual Friend, (my favorite Dickens novel) when someone tries to call in the debts of the penurious Eugene Wrayburn:

‘Not at all, I assure you. Did he mention that he knew me?’

‘He did not. He only said of you that he expected to be paid by you.’

‘Which looks,’ remarked Eugene with much gravity, ‘like not knowing me….’

Well, let us see how unreasonable Germany’s expectations are.

source: tradingeconomics.com

Well, a debt-to-GDP ratio of 175% does look bad, but would you like to know the debt-to-GDP ratios of other countries?

Japan: 227%

source: tradingeconomics.com

U.S.: 102%

source: tradingeconomics.com

Let’s extend that time period further:

source: tradingeconomics.com

So we’ve got debt-to-GDP ratios similar to that of WWII. Just as a comparison.

Russia’s debt to GDP ratio is fairly low:

source: tradingeconomics.com

But it has relatively bad credit ratings given this ratio. How can that be?

I’d look here for explanations: first, Russia has shown willingness to default when it suited their purposes, most of Russia’s debt is denominated in its own currency (rubles), oil prices have been low, and Vladimir Putin. Oh, and George Soros says Russia could default.

Anyway, it’s nice of Germany to expect to get paid. It’s nice to think that pensions will get paid, too.

It’s nice to want things, and unlike what Mick Jagger sings, you don’t always get what you need, either. Even if you try sometimes.