FedUpUSA

Oh Oh… Greece Raises The Reparations Claim

GreeceFightsOn

Now this has potential to get interesting…

“We don’t owe the Germans money, they owe us,” he told Reuters in an interview in his central Athens office, sitting in front of a line of campaign posters for his radical Syriza bloc, which placed second in last Sunday’s Greek parliament election.

“The total they owe us is 162 billion euros without interest. If you add 3 percent interest, it’s more than a trillion euros. But we can accept a haircut on the interest.”

Actually, there’s a problem here — his accounting appears to count inflation twice.

See, he inflates the principal.  But you don’t get to do that — the reason you get interest is to cover the expected inflation and the risk of non-repayment.

So inflating the principal would be to demand to be paid for the expected event twice — after the fact.

The figure he uses for money Germany owes is made up of war reparations awarded to Greece at an international conference in Paris in 1946 ($7 billion at the time, adjusted for inflation to 108 billion euros in today’s money) and the forced loan Greece made ($3.5 billion, adjusted to 54 billion euros today).

No no no no no.  You can have inflation on the original sum or (if provided for) interest, but you can’t have both since that is compounding on compounding and wasn’t part of the original contemplated agreement.

Of course this is more of a political foil than a practical one….. but if it gets legs over there…

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