COMMENT: A recent Foreign Policy article analyzes Germany’s seemingly schizoid behavior toward bailing out the Euro as resulting from a desire on the part of that country to assert its independence from World War II guilt.
“Germany’s Not that Sorry Anymore” by Yascha Mounk; Foreign Policy; 10/14/2011.
EXCERPT: With market confidence in Greece and Italy further eroding, Germany’s cash reserves are now the last best hope for the euro. Without a bold, continentwide rescue effort led by Germany, the single currency is likely to disintegrate. Yet it now seems clear, as indeed it should have for the last three years, that Angela Merkel’s government would rather risk the euro’s collapse than act decisively.
Germany has profited mightily from the adoption of a common currency. Blessed with a dynamic export economy that does most of its trade within the eurozone, it has gained more than anyone else from the greater ease of doing business with its neighbors. What’s more, even Germans who remain nostalgic for the Deutsche mark should realize how catastrophic a collapse of the euro would be. The world economy would fall back into recession. German exports would shrink precipitously. German banks, which have large holdings of Greek and Italian assets, would require vast sums from taxpayers to survive. Unemployment and the national deficit would skyrocket. . . .
. . . . Germany’s seeming willingness to let the euro crash and burn thus indicates that the current leadership vastly underestimates the country’s need for long-term strategic partners. German politicians of the postwar era were masters at pursuing Germany’s self-interest even as they talked about noble ideals. German politicians today have naively taken their predecessors’ rhetoric at face value. Disgusted by a submissiveness that never actually existed, they have grown determined to be more assertive. As one leading member of the FDP, the small liberal party that is part of Merkel’s governing coalition, insisted: “For once, we’ve got to show that we’re capable of saying no.” In that spirit, Germany’s leaders are talking up a storm about their country’s self-interest even as they gamble away the economic livelihood of their own citizens.
A transformed Germany now threatens the stability of the euro, and indeed the future of the European Union itself. But the reason is not just that the new Germany has grown more selfish. If Germans were simply acting rationally, they would bail out the euro. The problem, rather, is that the leaders of the new Germany are so mired in an overreaction to the past that they have become blind to their own self-interest.
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Pretty sick to see that the German gov’t is trying to pull this kind of stunt.
Thanks for the article, Dave. =)
Not to let Reich 4.0 off the hook, it seems academic to say here that the writers of Foreign Policy (and its parent, the Washington Post) have a stake in reinforcing the Euro-as-panacea myth. As do most of the euro powers — that is, the ones seeking to maintain and advance the centralization of decision-making power, devolving sovereignty, etc. Embarrassingly, Greece (its people, not its banks, nor its banks’ politicians) have no need of the myth, somewhat like the way Argentina gave the finger to the IMF ten years ago. Any smaller nation could do the same, with a politically informed and active populace. Merely stating that the slow-footed approach Germany has undertaken, or raising the alarm that a “transformed Germany” is a new threat seems disingenuous (what about the British pound, or the Swiss franc, for example?). Is it indeed a fact that the Euro’s stability or success is a function of German support or non-support? If so, Yascha Mounk, then please show your work!