They’re at it again. If they aren’t bombing London, writing six hour operas or nailing proclamations to church doors, those pesky Germans still find some mischief to get up to, and now — they’re just ruining Europe.
That’s right. All you have to do these days is pick up a newspaper or turn on the TV to hear how Germany is once again doing its level best to bring chaos and terror to Europe, which teeters on the brink of bankruptcy because — well, because it seems that some nations were maybe a little too generous with their citizens. Is that so bad?
Now that their neighbors need a little help, the Germans typically refuse to cooperate. Why? After all, it’s not like they can’t spare a few euros — their savings rate is among the highest in the world. In fact, many expert economists have pointed out that German failure to consume more and save less has contributed to the slowness of European recovery, and may in fact plunge it right back into a recession.
But Germans insist that the solution to Europe’s woes lies in austerity, because austerity means that Germans get to keep all the coin they have squirreled away. Indeed, one might suggest that Germans actually enjoy the suffering of nations which have done nothing more than try to provide a higher standard of living for their citizens. “You should watch your spending,” say the Germans, “and pay your taxes.” Well, who asked you? Do Germans think they are all of a sudden in charge of everyone else? Didn’t they already try that a few times? Have they short memories?
Worse still, German stinginess is now spilling over into the US economy, and other expert economists are now saying that US joblessness and tepid growth may not be Bush’s fault any more, but rather the result of European economic conditions that Obama has no control over (either way, it’s certainly not his fault).
Okay, enough. Still, you have to wonder what the hell Germans must be thinking these days. First, they have to watch the Greeks rob them of a few hundred billion euros by lying through their teeth about their credit:
In early 2010, it was revealed that successive Greek governments had been found to have consistently and deliberately misreported the country’s official economic statistics to keep within the monetary union guidelines. This had enabled Greek governments to spend beyond their means, while hiding the actual deficit from the EU overseers. [Wikipedia]
Okay, bad enough, but then they had to sit silently grinding their teeth as Greece:
a. airily demanded more billions
b. asserted that it was actually the fault of the Germans and the French banks, who should have known better than to believe a thing the Greeks said. This another kind of “she was asking for it” rape defense.
Now, the Greek left is saying that, if they win the election, they will void the pact the previous government accepted in order to receive the last tranche of 100 billion or so euros (“we can’t believe you assholes are such suckers”). So who is the bad guy here? Well, it’s…Germany.
The Germans are not eager to continue pouring Alp-sized helpings of their hard-earned cash into what appears to be an insatiable maw, and have had the temerity to suggest that further subsidies should be accompanied by stronger controls. Borrowers respond that such controls violate national sovereignty. Sovereignty means that no one else can tell you what to do, because you are responsible for your own welfare. You can see how rapidly this notion begins to entire the realm of the comical in this discussion.
Still, Germany has conceded that it is at least amenable to discussing a kind of “common fund,” which will buy from European governments all bonds that exceed 60% of that nation’s GDP. This should reduce borrowing costs considerably for the PIIGS — Portugal, Italy, Ireland, Grace and Spain — but will raise them for Germans in particular. The Germans see this as preferable to simply handing the PIIGS their credit rating through the issue of so-called “eurobonds,” which is really shorthand for “if we don’t pay, then the Germans have to.”
This brings us too the real rub, which is “austerity.” Numerous “expert economists” have pointed out (correctly, probably, for once), that austerity at this point is probably not the best antidote to a continental economic contraction, and that more stimulus over the short term would be to everyone’s long-term benefit. Here, we agree — in principle.
The problem is, no one — the Germans least of all — can look with equanimity at the prospect. What possible assurance can the Greeks give anyone that they will abide by their agreements? For others, “stimulating” a nation that has spent the last ten years in an orgy of onanistic self-stimulation with no regard for the harm they must inevitably inflict on hundreds of millions of their fellow euro-citizens must seem almost insane. And it is.
Hence, a likely outcome. Yesterday the euro-sachems announced a substantial injection of funds into Spanish banks whose insolvency is based more on a real estate deflation (sound familiar) than outright fraud by their treasury and central bankers. With any luck, this will persuade depositors that they are safe, and stem the capital flight that has pushed Spain — which is actually a fairly strong economy, as is Italy — into danger’s path. It is also reported that this arrangement was arrived at with no meaningful strings attached regarding the autonomy of Spanish fiscal policy, which would be good news indeed to other nations who fear that the price of economic revival might be paid for by decreased control over their own internal financial affairs.
As all this unfolds, all eyes will be on Germany, which, at the end of the day, is the essential guarantor for all such infusions and bailouts. The French have a significant role to play, as do other nations with communal interests, but the French are already backpedaling under Hollande from facing the consequences of their own excesses, and with Britain still on the euro-sidelines and the Swiss secretly rejoicing in their stubborn independence, Germany remains the Fort Knox of Europe. And Greece? Well, a nation that prides itself on how well they dance now confronts the grim moment when the music stops, and the piper must be paid. It looks like he’ll have to accept drachmas.