As the German economic miracle evolved, the rest of Europe —
eventually including post-Soviet Russia — benefited from Germany’s
success that had come about without the military ambitions that had
dominated the 20th century twice before. This was the “good
Germany”: hard working, economically careful, and non-exploitive of
its neighbors, in fact generous in its financial assistance. The
21st century has brought a new problem — and a new Germany.
Put in simple terms, other than Germany most of the European
Union led by France is committed to stimulative measures for a
faltering economy through deficit spending. Germany, reflecting its
naturally disciplined instincts, as well as a desire to protect
itself financially, wants the EU to follow the line of carefully
organized austerity and decreased state expenditures.
Obviously the French view satisfies popular instincts in
debt-ridden Europe as it is based on the concept that government
spending can stimulate economies that will, in turn, provide
employment and encourage private investment. Angela Merkel’s
Germany sees the French plan of its socialist president, François
Hollande, as a mechanism to use German money to provide the
stimulus to make all that happen. The “good Germans” are digging in
their heels. They don’t see much advantage in being that good.
Conveniently available for the blame for the parlous state of
current financial affairs in Europe is the American banking crisis
of 2008 to which European politicians point when seeking to deflect
their portion of responsibility for the sovereign debt problems and
banking failures in their own countries. While the U.S. sub-prime
mortgage financial meltdown certainly contributed to the global
banking crisis, it is factually inaccurate to absolve European,
Middle Eastern and Asian participating financial speculators for
their roles. And that is to say nothing of the fact that Europe’s
sovereign debt is not related to the American private banking
issues.
The Germans haven’t wasted much of their time on this
irrelevance, but they also don’t see why their country should be
expected to pick up the tab for the European Union’s 2012 sovereign
debt profligacy. While the EU implicitly counted on a financially
sound France and Germany, France in recent years has tended to rely
on the economic security that Germany provided. This was the key to
the balance that was essential to maintain France’s central role in
both the economy and polity of the EU. Effectively therefore the
eurozone depends on Germany and the cohesiveness of the European
Union depends on the eurozone.
While Chancellor Angela Merkel may pretend acquiescence during
international financial meetings, such as the recent G-20 in Los
Cabos, the reality is that there is no chance she will agree to
Germany assuming the responsibility for Europe’s indebted nations’
recovery unless there is a greater eurozone commitment to fiscal
restraint. It would be political suicide for her to do otherwise—
to say nothing of very bad national economics. The problem is that
Germany may enjoy the status it has attained as the European
economic powerhouse, but it is not about to assume the
responsibility for a political economic situation contrary to its
own best interests. In basic terms Germany considers the essential
flaw in the eurozone’s creation to be monetary integration without
fiscal integration.
The German people are a far more diverse body than they were
when they took on the world in the days of Hitler’s dictatorship.
Unfortunately for the German Volk the rest of the Western
world may not fully understand the evolution of the country and its
people. German government leaders — Merkel or anyone else —
reflect their body politic and that means while wanting to be good
world citizens, they have no belief they owe the world for their
success. They believe in austerity in times of financial stress and
expect others to accept that as an economic verity.
When it is argued that Germany has a structural problem due to
its dependence on exports to the European Union, the German answer
is consistent. In German the expression used is wirtschaftliche
Einshränkung; meaning economic restriction or more
colloquially, “tightening one’s belt.” When queried why Germany
decided to aid Spain contrary to its previous protestations, the
response was typically German. In May 60 billion euros fled Spanish
banks, ending up mostly in Germany. That was about half the amount
that has been made available to the Spanish government that, in
turn, will bail out the Spanish banks — that will bail out the
Spanish government. Berlin thought that good business and politics.
However, as one German banker said, “The first hundred billion is
the easy part.”
There’s more than one way to conquer Europe — and get them to
like you while doing it. The currently considered concept of naming
an All-Europe Finance Minister and a board to guide that individual
seems to be gaining approval in Germany. Guess who will control
that board and the minister!
