Sparpolitik Wiederholung

If you read my last post about the European debt crisis and missed the linked article (at the current moment it has been taken down for copyright reasons), I am going to try and summarize the gist of it here.

Warning: This article has no pictures!

The author discusses the polarized German and Greek views on the current European debt crisis. Here’s a quick synopsis of those views, see if you can guess who holds which ones…

• Greeks are lazy people who acquainted themselves with government handouts.
• Over the past decade, the Greek government has embraced a corrupt modus operandi including massive criminal lies about finance, irresponsible borrowing, and general mismanagement.
• Germany’s success today as the strongest European economy is built on the hard work and (perhaps obsessive compulsive) regimen of its people, coupled with a disciplined and conservative fiscal policy.
• Giving Greece a “bailout” would be tantamount to endorsing their government’s poor habits and would encourage further problems in the future.
• The European community has placed burdensome austerity measures on the Greeks in harsh revenge, aimed at humiliating the Greek people. The “bailout” is nothing more than a modern Trojan Horse.
• The austerity measures have been hurting the Greek people and holding them in a level of poverty out of which they cannot escape.

The reason this is a sort of standoff between Germany and Greece is because most of the money in any kind of bailout would transfer between those two countries.

The author strongly reminds us that despite the current economic success in Germany, that follows a very indebted and frail period in its history that only ended after plenty of debt forgiveness and international cooperation.

You might have learned in your history class how Germany was in a real pickle following the First World War. It had huge reparations payments to make, amassed huge debt, and experienced hyperinflation leading to an epic economic crisis. It faced a similar crisis after the Second World War, with debt accounting for over 200% of the gross domestic product.

In both time periods, the international community came together and worked to remove that debt. Agreements such as the Young Plan and the London Debt Agreement provided a way out of encumbering obligations and freed Germany from payments it couldn’t or wouldn’t afford. He argues that the Wirtschaftswunder (the “economic miracle” following World War II) in Germany stood on the foundation of debt forgiveness and would have been impossible given similar austerity measures that the EU community has been placing on Greece.

This is not to say that Greece should be given some sort of get-out-of-jail-free card. The Greek government has definitely perpetrated this economic implosion. However, the author brings up several questions concerning European unity and fraternity.

How many generations should suffer from the consequences of their ancestors? For example, German youth today are largely free from burden of the atrocities of their grandparents because of a massive international agenda to move forward from the past and focus on building a new and prosperous community of nations. The gradual and conservative austerity plans place a few generations of Greeks to come under the weight of the problems from the previous political machine.

Are current European lenders and nations offering Greece unfair and punitive assistance because they have forgotten the very measures which pulled them out of their own crises just decades prior?

Finally, if this is not to end in an existential European crisis, it requires broad restructuring of pan-European debt, not just Greek debt. No point in the European Union history has been so decisive as now, given the question of the so-called “Grexit.” Pridefully and arrogantly dismissing the repercussions of a Greek exit (on account of the debt issue) could lead to the eventual undermining of the whole union.

It’s a tough issue and I’m anxiously waiting to see what happens. If this doesn’t seem too familiar, try reframing the discussion so something closer-to-home, such as the derelict relative with hungry children or the wealthy relative whose success came only after being adopted into a loving and generous home.

Times like these require patience and open-mindedness. In fact, it should trigger our reserve any time someone is simultaneously seen as both a hero and as a harbinger of evil (ahem, US presidential candidates, social/welfare advocates, gun rights advocates,). The issues are probably far bigger and more complicated than we admit and the answers probably far more difficult than we want to accept.