Eurocrash: Merkel - put up or shut up Monday 20 August 2012  Basically, the day of reckoning comes closer. Is Merkel going to allow Greece to go bankrupt and fall out of monetary union, or is Germany going to throw good money after bad, at the cost of her credibility when the EU once again ignores the rule violations by the aid recipients? And is she prepared to do the latter, even at the cost of the coalition, triggering new shock waves that would leave the largest euro country without a government? Now is the time, says the paper, to consider how the damage can be minimied and financial credibility restored. It will be crucial that Merkel and French President Hollande finally a way of working together and develop a common strategy. On this, the success of any euro rescue will depend significantly. Another thing Merkel must do, the paper concludes, is resists the temptation to drag out the decision till the elections. Neither Greece nor the eurozone would be best served by delay. And when a prestige German newspaper is saying this, you know something is up. COMMENT THREAD Richard North 20/08/2012 |
Eurocrash: Germany has already paid enough Monday 20 August 2012  Germany has instigated two world wars and both lost, he writes. It cost millions of people their lives and created untold suffering. The Germans were often "Hitler's willing executioners". In the eighties, Sulik's family emigrated from Slovakia to Germany. He attended several German schools and remembers well how much time was devoted to German war guilt and reparation. Billions have been paid in compensation and still Germany feels it necessary to give submarines to Israel. And Germany should have paid a great deal; after all it had done terrible damage. But, asks Sulik, how long will it now pay in the euro crisis? On 27 September 2011, the then German president Christian Wulff visited Slovakia. Sulik was at the time in office as president of the Slovak parliament, and the coalition government was about to vote on the increase of the EFSF. When he asked why Germany supported the increase - which Sulik opposed - Wulff replied: "You know, we have historical obligations". But, writes Sulik, anyone who did something wrong in the war must now be at least 90 years old. There can be no more than a few thousand people left. So, asks Sulik, how long should the Germans pay for everything? 50 years? 100 years? Forever? Brantner, he says, has argued for joint liability, claiming that this is about anything but money. Rather, it is about solidarity, historical responsibility. These are fine words, Sulik says, but it still all comes down to money. Wolfgang Schäuble, born in 1942, pays willingly - even if it is not his own money, but the taxpayers. And so are most politicians quite generous. But Schäuble's childhood was overshadowed by discussions about collective guilt and reparation. Nevertheless, Sulik says, when a young politician like the upcoming 33-year-old Franziska Brantner writes: "We have a joint liability for the debts of other euro countries", I am amazed. Supposedly, Germany has to do this to save its exports and therefore jobs. Germany should therefore pay for the southerners, so that people there can buy German products. Besides the trivial question of what good is exporting if the exporting country pays itself, there is a lot trickier question: if things are being given away, would it not be better for Germany to give them its own citizens instead of foreigners? Or it is argued that without community liability, the eurozone will collapse? But if this is turned round, community liability means that the eurozone is already broken. That is why there is Article 125 of the EU Treaty - the so-called no-bailout clause. It states that everyone is liable for its own debts. However, says Sulik, as a Slovak he might not care whether Germany becomes a Christmas goose, if it were not for two factors. First, he is convinced that liability for others' debts leads to a situation where no one feels responsible for their actions. Why, for example, should the Greeks choose someone other than Alexis Tsipras who basically says do not save, Germany will have to pay. Germany already pays billions to Greece (at the same time that Mrs Merkel is in Greek newspapers depicted with a swastika on her arm; this is a bad joke). Another example is Slovenia, which has made enormous efforts to make savings, yet has still been downgraded by the rating agencies. The Slovenians are now at a crossroads: either they can work harder to avoid debt and thus "reward" Spanish banks, or they can relax and go into debt like everyone else. If they remain solvent, they have to pay for the rescue of other countries. That's the dangerous thing about the union liability: The result is an incredibly strong motivation to go into debt. If someone then promises to balance the economy, they are ridiculed. By any rights, debt will never be avoided. This applies specifically to Italy and France, which refuse any control and will refuse because they are "grand nations". And Grand Nations will be dictated to by Brussels, but when it comes to anything more than about getting German money, the European idea ends very quickly. The second factor affects Slovakia more. Slovak politicians have unanimously declared "adherence to the German course" for reasons of state. Whatever Germany does, we do it as well, says Sulik. So if Germany for whatever reason rescues someone, Slovakia rescues someone as well Lately, Slovakia, the poorest country in the eurozone, has had the honour of saving private Spanish banks. We do not even have a continuous motorway link between the two major cities, says Sulik, but we save private banks in a much richer country. The real problem is the acquiescence to the risk arising from liability, which ultimately harms other countries seeking to do business responsibly, for example Slovakia. There have been several attempts to save the eurozone, with two dozen crisis summit. Germany has been hit hard and the price for Germany's exports has not been paid. The figure is currently at €730 billion, as well as a 27 percent joint liability for any loss of the ECB. Eventually, there will be nothing else left for the German politicians to do other than to pull the rip cord, otherwise the eurozone will be a huge mess. Germany does not need any more guilt. It has already paid enough. COMMENT THREAD Richard North 20/08/2012 |
Posts
