Can I ask who the creditors are? Seems as though every country is in debt -- UK, Germany, Canada, Australia, China, Singapore, etc.
So if nobody has any money, who exactly is loaning every country all this money? I know it's IMF, ECB, etc.... but still, where are they getting the 100s of billions to throw around?
If Germany HAD to repay all its debts by the end of the year, they could. We would have to cancel the entirety of our military and tell some slackers to suck it, but we could repay our debts no problem.
So which part of a balance sheet do you not understand? We borrow money cheap and lend it to greece at a premium. Thats how you make a profit.
Also, while keynesianism might not be the favourite economic theory flying around, its simple mathemtical fact that if the economy grows by 2%, and you borrow 2%, all you really did was liquidize your assets.
To put this in simpler terms for the simple person that you are:
If you buy a house and borrow money to do so, you are in debt but you arent broke. Even if you had the cash to buy the house, you might opt not to do so. Thats because theres something called opportunity cost - if you spend 300k on a house instead of borrowing it, you lose 300k buying power immediately.
The IMF is a supranational organization, funded by nobody in particular (in a legal sense) but in the end, the money flows out of countries like germany.
The ECB prints money. If they overdo it the euro goes down the shitter, so the amount of printing they do is based on the value of the european countries that are part of the union. Maybe not directly, but certainly implicitly.
And because this seems to be such a difficult concept for you to grasp:
Nobody is showing up somewhere with billions in cash and makes someone elses problem go away. Greece doesnt have anyone show up at their door demanding money. They dont have de-facto creditors the way you do. They sold bonds at some point that expire. Normally, expiring bonds are paid for by issuing new bonds for more money - because the economy grow over the past 30 years - this should be easy. Its not for greece. If we send them 300 billion euros, we dont give them 300 billion euros, we act as a trustee that guarantees that IF greece defaults in the future, we will pay their debts. In the same way your mother co-signs a 16 year olds first leise just in case he cant pay for some reason. This is not a problem for us in any way, because we wont allow greece to default. Greece wont ever default while theyre part of the union and if they leave the (monetary) union, they get their old currency back with a fixed euro exchange rate.
If that ever happens, we will fix their exchange rate, and force them to take back their debts, either directly or implicitly by fucking their new currency up.
To end this, ill explain it in terms of a show you probably watch. A Lannister always pays his debts. Nobody knwos how much money the lannisters have. And nobody ever cares, because a lannister always pays his debts. Its irrelevant whats happening on their backend, because their debts are paid. In the same way, it doesnt matter how much germany owes whom, because we always pay our debts. We pay them by acquiring newer, greater debt, but that is irrelevant. We are trusted.
