Countries are still paying off debt from World War 1

http://qz.com/290183/in-2014-countries-are-still-paying-off-debt-from-world-war-one/

by gamechangr • 12 years ago

162 77 12 years ago

qz.com

carsongross• 12 years ago

Ah, that's nothing. The brits still haven't paid off the loan some guy named William III took out in the 1690's.

Shirkers.

lotsofmangos• 12 years ago

The people from the bank do visit, but Liz set the corgis on them last time while Philip waved a shotgun around and shouted something rather rude, so they are leaving it another decade or two before they try again.

EliRivers• 12 years ago

On a related note, shells fired during WWI are still killing people today. Hell of a thing, to fire a weapon and kill someone a hundred years later.

http://www.bbc.co.uk/news/world-europe-26654314

Alupis• 12 years ago

Not terribly uncommon. Landmines and the like are still scattered all around many parts of the planet. And, just a few years ago near where I live in CA, a train exploded due to long buried WW2 munitions (a train had derailed at some point in a rainstorm and a great number of warheads got buried in the mud).

monksy• 12 years ago

This is a fairly common thing. Parts of Tegal airport were dug up recently to detonate unexploded ordinance, its found fairly frequently in Germany.

smacktoward• 12 years ago

It happens in the US too, occasionally. The campus of my alma mater, along with a good chunk of the surrounding neighborhood, was taken over by the U.S. Army during both World Wars and used as an artillery range and, during World War I, a chemical weapons development center. (See: http://en.wikipedia.org/wiki/Camp_American_University)

As a result, even up to the mid-1990s, when I was there, it was not unusual to see a block or two closed off periodically because someone digging had found unexploded ordnance there. And due to the chemical weapons work, these discoveries were more disconcerting than usual, because who knew if it was just a standard high-explosive shell or something loaded with mustard gas, or worse?

patio112• 12 years ago

The most recent casualty of the U.S. Civil War lived to see Obama voted into office. He is unlikely to be the last.

UXO is a hell of a thing.

cbd19842• 12 years ago

The last Civil War veteran died in 1956; the last to have seen combat died in 1953.

http://en.wikipedia.org/wiki/Albert_Woolson

http://en.wikipedia.org/wiki/James_Hard

And the last Revolutionary War veteran died in 1866. (The year after our Civil War ended, in case you don't know much American history.)

http://en.wikipedia.org/wiki/Lemuel_Cook

parados• 12 years ago

And WWII aerial photographs are still used to find unexploded weapons: http://ncap.org.uk/case-studies/explosive-ordnance-disposal Quite something to take a photograph 70 years ago that saves a life today.

justincormack2• 12 years ago

Governments have rarelybpaid down debt in absolute terms (there are exceptions eg Australia at one point). Generally it shrinks as a percentage if GDP at best. If nominal GDP ever stops growing it will never be paid off. Hence 2% inflation targets...

seanmcdirmid6• 12 years ago

Taking on debt is also necessary for a functioning financial system with the US gov playing an important role as global debtor of last resort. Money has no intrinsic value, and the only way to save it is for someone else to borrow and spend it!

Inflation is basically a tax on savings, which is not that bad when you consider again that money has no value. A low inflation rate then creates subtle pressure for people to invest money productively (or just spend it) as they lose out if they just hide it under their mattress. A high inflationary rate is not good, of course, as you basically can't save at all, while deflation is also bad because it rewards saving and causes value to evaporate (since money has no intrinsic value, things produced have to be bought and used...).

icelancer4• 12 years ago

This is a very Keynesian way to look at things that isn't necessarily absolutely true. There are a lot of times when this ideal of "slight inflation" is detrimental given the actual output of said policies.

CyberDildonics• 12 years ago

This is one possible dynamic of a monetary system, but it is not how things must work by any stretch. Until the Bretton-Woods agreement gold was shipped from country to country to settle trade imbalances. Money was an IOU for gold and not a method of nullifying debt with currency.

Retric• 12 years ago

The US has massively paid down debt at several points in history. And several countries have gone vary close to zero debt. The real issue is debt is like crack to elected officials as you get to seemingly spend money without apparently raising taxes.

jacques_chester• 12 years ago

Australia reached zero long term debt in the mid 2000s. The only debt that remained was a rolling short term bond intended to create a stable liquid asset for banks.

gamechangr2• 12 years ago

"rarely paid down debt" --- agreed, but mostly because with inflation...it doesn't make good economic sense

spitfire• 12 years ago

I recall a bond from the 1700's in London that isn't being paid off. It had a structure that made it better to simply pay the interest rather than pay out the full bond.

Looking it up, I think it was probably a british Consul. A type of perpetual bond. Which in the case, you have very little reason to redeem it. http://en.wikipedia.org/wiki/Consol_(bond)

walshemj2• 12 years ago

Until fairly recently before QE the 4% consol was well under par around 70 and so would have been costly to redeem.

I looked at buying some of the consols for my ISA last month - its one of the few ways of getting a safe investment that pays more than inflation.

justincormack2• 12 years ago

The 4% Consol is the one being redeemed. Not entirely clear why - they could buy it back cheaper in the market than paying par.

jmnicolas• 12 years ago

Wars would be over sooner if it wasn't for debt.

zw123456• 12 years ago

One could argue that the true cost of war can never be repaid.

tedunangst• 12 years ago

It was only 100 years ago. Countries are still issuing 100 year bonds today. http://www.bloomberg.com/news/2014-03-12/mexico-said-to-sell...

whiddershins• 12 years ago

no better read than "Debt, the first 5,000 years" to realize you can't possibly be cynical enough about the nature of debt.

http://www.amazon.com/Debt-First-5-000-Years-ebook/dp/B00513...

sdm• 12 years ago

From the Amazon description:

He also brilliantly demonstrates that the language of the ancient works of law and religion (words like “guilt,” “sin,” and “redemption”) derive in large part from ancient debates about debt, and shape even our most basic ideas of right and wrong.

Did he just rewrite Nietzsche's "Genealogy of Morals"?

wnevets• 12 years ago

So the solution to this was brokered by the future US vice-president Charles Dawe, who in 1924 proposed that the US lend money to Germany to fund its reparation payments to France and the UK, who in turn would use the money to repay their war debts. The solution was so good that Dawes won the Nobel Peace Prize the next year in recognition. And the plan worked.

Wow.

Spooky233• 12 years ago

Here's an example of 19th century debt in NYC

http://www.nytimes.com/2009/02/13/nyregion/13jerome.html?pag...

cperciva2• 12 years ago

Misleading. The debts in question could have been paid off years ago if anyone had wanted to, but they were at such low rates of interest that it was better to pay off more recent debts instead.

mtmail• 12 years ago

True. In 1990 Germany had €125 million debt outstanding. Easy to pay off if they wanted. Instead a new contract was signed with 20 annual installments.

brazzy• 12 years ago

And note that those 125 million were only outstanding because their payment had been frozen while the country was divided. Someone made a HUGE profit on what were fore decades essentially super-junk bonds.

jaekwon• 12 years ago

How is that misleading? That's typically how one fails to pay their debts -- by priority.

loupeabody• 12 years ago

I suppose there's a suggestion that due to some horrible infrastructure or mismanagement they've been left unpaid. As in, the nature of national debts and the these countries deal with debt is irresponsible or unfair or impractical or all three at once.

Or that the scale of the war can be appraised form its cost to society, just as a matter of perspective.

The reality it seems, is much more mundane, as you point out. That suggestion though, is what maybe the piece is suggesting by its headline. That kind of controversial commentary is why I'd clicked on it to begin with, but if I'd known that it was just being literal about the topic, it wouldn't be nearly as appealing.

Still, it's kind of crazy that these old debts are still lingering around. Just in a broader, historical sense.

joosters• 12 years ago

It's hardly misleading. The article itself explains why these bonds were paid off now and not earlier.

cperciva2• 12 years ago

I should have said that the headline was misleading. I agree, the article itself is fine.

gamechangr2• 12 years ago

Germany makes it's last World War 1 payment 2010

http://www.spiegel.de/international/germany/legacy-of-versai...

chiaro• 12 years ago

A quote from an econ professor:

"Economists hate war because it's the equivalent of taking your economy out the back and shooting it"

bsitum• 12 years ago

wow

frik• 12 years ago

The country next to Germany, Austria, has to pay to both the allied forces and soviets (russia) for WW 1 & WW 2: much of the former land mass that formed Austria (it's now tiny), a lot of money, gold, natural ressources (like rare earth and food to the soviets) and as usual after wars they captured and removed all valuable technology. The allied bombed many cities and railway stations and 10% didn't exploded and many are still in the ground (the chemical ignotion mechanism is still active and several bombs detonate each year).

eliben• 12 years ago

Is your comment supposed to make someone feel sorry about a country that helped start wars that led to tens of millions of lost lives and devastated much of the continent for decades?

ntSean• 12 years ago

As your comment would suggest, we then _shouldn't_ sympathise with a country because of their history. After all, we can safely assume that everyone in that the country in question is an evil person looking to go start wars.

tomjen3• 12 years ago

It would be rather silly to feel sorry for a country, but why not feel sorry for the people living there? After all Hitler was elected in 1933, which means that anybody who was below 30 when the peace was made couldn't be considered guilty, and Hitler only got 30ish percent anyway.

Unless you want to go the collective guilt or blood guilt route.

shangxiao• 12 years ago

Technicalities about "helping" start either war aside (I'll let someone else more knowledgable in this area argue that), yes I do feel sorry for them, it's just basic human empathy.

rakoo• 12 years ago

The country did not start the war, people did. People who are not here anymore. And yet we make the people of today and tomorrow pay for what the people of yesterday did. That's ludicrous.

junto• 12 years ago

I'm British and live in Germany. My grandparents and my wife's grandparents fought on different sides of WWII. In WWI my grandfather won the Military Medal (the highest possible recognition for a non-commisioned soldier) aged 19.

My children have dual nationality. Let's apportion your Nazi blame on them shall we?

Attitudes like yours solve nothing.

klibertp• 12 years ago

WW1 was supposedly started by assassination of some Austrian aristocrat, which doesn't look like "Austria helping start a war" in this case. Although I admit that I know relatively little about history and maybe there some other reasons I'm not aware of.

But even then, Austro-Hungary was an empire before WW1 and was left in more or less its current borders afterwards (like 1/10th of what it was before? I'm guessing here, but I remember it was a huge difference on the maps). I'd say that's enough of a reparations for any state.

michaelchisari• 12 years ago

Even worse than that,

http://en.wikipedia.org/wiki/External_debt_of_Haiti

France demanded that Haiti pay the modern equivalent of $21 billion in debt for the "loss of men and slave colony".

dba7dba• 12 years ago

Had it not been for WWI, most of the globe might still be under colonial rules.

PeterisP• 12 years ago

Didn't the main release of colonial nations happen after WW2?

Most of Africa, Palestine/Israel, India/Pakistan/Bangladesh, etc.

Countries are still paying off debt from World War 1

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