Readers of Via Meadia know that there’s little love or respect here for the lazy, lying demagogic politicians whose corrupt patronage politics have ruined Greece. Nor do we hold in particularly high esteem the cultural qualities that led the Greeks to support such rotten politicians year after year. Greek politics is in the school of Huey Long who famously told supporters that “If you’re not getting something for nothing, you’re not getting your fair share.”
It takes some truly talented screw ups to come up with a worse plan for Greece than the one the Greeks have developed for themselves, but the Germans have risen to occasion in fine form.
The latest German plan to “fix” Greece: the country should surrender control over its tax and budget policy to a European commissioner in exchange for the next €130 billion that Greece needs to pay off the rapacious and stupid European banks who, encouraged by fatheaded German banking regulators among others, paid top dollar for its worthless bonds.
Not that the Germans don’t have a point. Deep reform is needed if Greece is to stay in the euro, and so far the Greek political establishment — firmly backed by public opinion — is digging in its heels. Much whining, much talk, many promises and precious little action seems to be the favored Greek approach to the crisis. On the other hand, the austerity policies the Germans favor are hopelessly biased in favor of German banking interests and are aimed more at the preservation of the reputations of German politicians than at helping Greece.
The German political establishment seems willing to destroy Europe to avoid telling German voters the truth about how stupid it has been. Germany’s leaders are doing everything possible to conceal the ugly truth that the mistakes that the German banking and regulatory establishments made in underwriting Club Med debts are as much a cause of Europe’s woes as spendthrift Greeks.
German bankers (along with their colleagues in many European countries) jumped feet first into the Greek debt morass. They are also up to their eyeballs in Spanish, Portuguese and Italian bonds. It was not simply their inability to make good lending decisions that landed them in this pickle; the German government encouraged banks to load up on Club Med debt even as those countries grew steadily less creditworthy after 2008. Banks were told that the sovereign debt of eurozone members could be carried on their books risk free, in effect making those bonds significantly more attractive than other securities priced at a comparable level.
Much of German (and French) policy in the crisis pretends to be about saving Europe but is really about saving their own banking systems, if at all possible without drawing the attention of voters and taxpayers to the official idiots who helped make this all happen. By denouncing the profligate PIIGS, and demanding punitive austerity drives in debtor countries, German politicians are demagogically whipping up their own public opinion while covering up their own grievous and expensive misjudgments. It takes two to make a bad loan and German authorities richly deserve to be pilloried by their own population for their clueless financial leadership in the euro era. It is deeply irresponsible as well as cowardly for them to dress in the robes of righteousness and beat the Greeks.
Notwithstanding their own many sins, the Greeks should treat this latest German proposal with the contempt it deserves. If Greece is to make the reforms and take the painful steps the Germans want, its elected politicians should take those steps on their own. If its elected officials choose to defy the Germans, Greece will almost certainly have to leave the euro in great pain and tribulation.
Those are unpalatable choices, but the miserable combination of Greek and EU shortsightedness and greed seems to have left no better options. The only freedom the Greeks have left is to choose how to suffer, but that is a choice that must be theirs to make.
German politicians from Chancellor Merkel down love to talk about their dedication to Europe and their desire to see the current crisis resolved through the strengthening of European institutions. If this is sincerely their belief and not a shallow pose, they can begin by taking public responsibility for their own very considerable part in creating the European crisis, explain to German voters that Germans are going to have to pony up to save their banking system from the consequences of bad regulation and stupid loans, and come up with a much more just and reasonable approach to the European crisis than anything they have yet proposed. That solution will certainly include many of the reforms Germany advocates today, but it will also include measures that share the sacrifices far more equally and fairly than anything the Germans have yet been willing to conceive.
If Germany’s leaders don’t do this, they stand exposed as spineless opportunists who are genuinely ready to wreck Europe to preserve their miserable political careers. This is Kaiser Wilhelm class political irresponsibility and incompetence, if not quite up to later German accomplishments.
Without years of stupidity on the part of Germany’s banks and politicians, Europe would not be in this fix today. Their cowardly and irresponsible failure to take their fair share of responsibility for this mess is at the heart of the inability of Europe to overcome its crisis today. Germany must come clean for Europe to thrive.