There are a number of reasons why it makes sense to forgive Greek debt. The money required is a drop in the ocean compared to how much tax payers gave to the banks. Deutsche Bank alone received billions during the banking crisis where it was the principle beneficiary of the AIG bailout, and from liquidity support from the European Central Bank, the very financial institution that is now turning the screw on Athens.
When Greece joined the Euro, it didn't meet the economic "convergence" criteria, yet all Eurozone countries looked the other way, including Germany. This timidity is a collective rather than singular failure. Thus, the resulting tab should also be picked up collectively rather than singularly.
Germany lectures the world about paying debts, yet where would it be without the debt relief it received after World War 2, a conflict that included mass theft by the Nazis from Greece? It was allowed further debt cancellation after the fall of the Berlin Wall, which helped subsidise German reunification. Economic historian Thomas Piketty picks up this last point in an interview for Die Zeit:
Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.
He goes on:
After the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP... Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.
Perhaps the strongest argument, however, is that the fundemental principle of the EU is "solidarity", a term maddeningly bandied about by every EU Commissioner and Franco-German diplomat when they want to protect their farmers from Common Agricutural Policy changes, or when highly-leveraged German banks need capital. If the term is to mean anything then action is needed to help ordinary people, rather than failed financial institutions, in dire times of need. This includes helping Greek pensioners queing up to take a pittance out of cash machines, young Greeks who cannot find a job, and Greek families forced to rely on food handouts. Surely this should be reason enough to cancel Greek debt. Wasn't this what the European project was started for, to alleviate suffering?
Alas, in the absence of an ethical response, it is fair to point to German hypocrisy, and to remind it of the countries it trampled on during two world wars, and of the nations - Greece amongst them - that forgave it and its people.