One is tempted, indeed one is required, to begin a discussion about Germany’s eurozone financial policy by introducing the word hypocrisy. Such a discussion should explain how even the smallest German sparkasse or dry cleaner is TBTF, how bankruptcy law is not the most lucrative profession in Germany, and how there are no German vulture funds. Germany is the homeland of not only TBTF but also of Too Small To Fail. In Germany, all corporations are above average, and all dry cleaners are national champions.
All nationalities are hypocrites in one way or another. It is normal to preach one thing and practice another. But nonetheless, I must observe that Germany is dispensing a medicine in the eurozone that it has never taken itself.
This is the German prescription: 1. Eurozone governments should be allowed to default on their debt, and there should be no implied guarantee from the eurozone. 2. Eurozone banks should be allowed to default on their debt and deposits, and there should be be no implied guarantee from the eurozone.
Well, I mean, come on. I suppose that in some sort of laboratory those theories could be tested. But in the real world, in pathetic Europe? To have the banks fail and the governments default is a bit, how do you say, risky? Please remind me of the libertarian utopia where such things have occurred and revolution did not ensue.
The German idea of turning Europe into a laboratory of libertarian economics would be more credible if Germany had ever tried even the smallest experiment somewhere in Germany. You know, such as allowing Depfa or Hypo or Berlin or the Saarland to default. But, as we know, all German entities are TGTF, Too German to Fail. Deutschland is not a country for failures, only successes!
I can certainly sympathize with the German view. I feel the same way about California, Rhode Island and Illinois. I would love to see them go bankrupt and sink below the waves.
Project Syndicate is returning to Climate Week NYC with an even more expansive program. Join us live on September 22 as we welcome speakers from around the world at our studio in Manhattan to address critical dimensions of the climate debate.
Register Now
But if I were the head guy in one of the Club Med colonies, I would not sit quietly, stewing in my own juices, while my people starved.
Germany wants the big Spanish and Italian banks to fail and default on their deposits. Germany wants the Club Med governments to fail and default on their bonds. Germany wants Southern Europe to eat grass. Which is understandable--that’s how I feel about Illinois. But I don’t think that schadenfreude is the appropriate basis for national financial policy. Call me weak and “caring”, but I don’t really enjoy seeing educated people begging in the streets and eating out of dumpsters.
Germany doesn’t care about the kids in Southern Europe. Germany only cares about German kids, which is perfectly rational. (What did anyone do for German kids in 1946?) But you can’t construct a country on the basis of sadism and schadenfreude. Either Germany must allow the South to control eurozone monetary policy, or she should exit the eurozone. Having a hard-money hegemon running the ECB is destroying not only “Europe” but also the lives of millions of innocent Europeans. That is not in Germany’s long-term interest.
To have unlimited access to our content including in-depth commentaries, book reviews, exclusive interviews, PS OnPoint and PS The Big Picture, please subscribe
The US presidential candidate's appeal to love of country is the right thing at the right time. Disregard the surfeit of flags and overwrought rhetoric: a healthy dose of patriotism is required to win an election, in the US or anywhere else, and it is – and should be – an essential component of liberal and progressive politics.
explain why the Democratic US presidential candidate's appeal to love of country is good politics.
While inflation and price growth have fallen in advanced economies, they remain stubbornly high in Africa, owing to rising food prices, the lack of formal employment opportunities, and austerity measures. The resulting protests in Nigeria and Kenya should encourage governments to rethink constraints on public spending.
urges governments to rethink constraints on public spending and increase investment in human capital.
Kishore Mahbubani
offers advice to Western diplomats attempting to engage with Asia, identifies risks to the region’s stability, highlights Singapore’s lessons for developing-country leaders, and more.
One is tempted, indeed one is required, to begin a discussion about Germany’s eurozone financial policy by introducing the word hypocrisy. Such a discussion should explain how even the smallest German sparkasse or dry cleaner is TBTF, how bankruptcy law is not the most lucrative profession in Germany, and how there are no German vulture funds. Germany is the homeland of not only TBTF but also of Too Small To Fail. In Germany, all corporations are above average, and all dry cleaners are national champions.
All nationalities are hypocrites in one way or another. It is normal to preach one thing and practice another. But nonetheless, I must observe that Germany is dispensing a medicine in the eurozone that it has never taken itself.
This is the German prescription:
1. Eurozone governments should be allowed to default on their debt, and there should be no implied guarantee from the eurozone.
2. Eurozone banks should be allowed to default on their debt and deposits, and there should be be no implied guarantee from the eurozone.
Well, I mean, come on. I suppose that in some sort of laboratory those theories could be tested. But in the real world, in pathetic Europe? To have the banks fail and the governments default is a bit, how do you say, risky? Please remind me of the libertarian utopia where such things have occurred and revolution did not ensue.
The German idea of turning Europe into a laboratory of libertarian economics would be more credible if Germany had ever tried even the smallest experiment somewhere in Germany. You know, such as allowing Depfa or Hypo or Berlin or the Saarland to default. But, as we know, all German entities are TGTF, Too German to Fail. Deutschland is not a country for failures, only successes!
I can certainly sympathize with the German view. I feel the same way about California, Rhode Island and Illinois. I would love to see them go bankrupt and sink below the waves.
PS Events: Climate Week NYC 2024
Project Syndicate is returning to Climate Week NYC with an even more expansive program. Join us live on September 22 as we welcome speakers from around the world at our studio in Manhattan to address critical dimensions of the climate debate.
Register Now
But if I were the head guy in one of the Club Med colonies, I would not sit quietly, stewing in my own juices, while my people starved.
Germany wants the big Spanish and Italian banks to fail and default on their deposits. Germany wants the Club Med governments to fail and default on their bonds. Germany wants Southern Europe to eat grass. Which is understandable--that’s how I feel about Illinois. But I don’t think that schadenfreude is the appropriate basis for national financial policy. Call me weak and “caring”, but I don’t really enjoy seeing educated people begging in the streets and eating out of dumpsters.
Germany doesn’t care about the kids in Southern Europe. Germany only cares about German kids, which is perfectly rational. (What did anyone do for German kids in 1946?) But you can’t construct a country on the basis of sadism and schadenfreude. Either Germany must allow the South to control eurozone monetary policy, or she should exit the eurozone. Having a hard-money hegemon running the ECB is destroying not only “Europe” but also the lives of millions of innocent Europeans. That is not in Germany’s long-term interest.