This article caught my eye. It made me laugh a bit.
There’s probably a lot of truth in that.
BERLIN (Reuters) – Buoyed by solid finances, roaring exports and low unemployment, Germany increasingly sees itself as the only grown-up in Europe, responsible for bringing wayward children into line to hold the family together.
The children are not enjoying it. Some, such as the Cypriots and Greeks and many Italians and Spaniards, are openly resentful of “Mutti” (mum), as Berlin officials privately call Chancellor Angela Merkel. Others, such as the French, are sulking.
The mood among German politicians and officials is one of economic self-confidence tinged with a sense of parental duty to provide the euro zone with stiff-backed leadership, even if that makes them unpopular in Europe.
“They routinely tell other euro zone countries how to run their economies, citing Germany as a model for the currency union as a whole.”
Well, if you’ve got other nations like Greece or France to look to, it makes a bit of sense to see Germany in a better light than most others. But, let’s look at some reality (even if the measurement distorts it a bit.) Mind the scaling……
Clearly, since the recession, Germany has outperformed the Euro area. However, looking at Germany’s GDP growth rate, we can see this isn’t exactly a model of a high performing economy. I’ve seen high performing economies in the past. Germany isn’t one of them, right now. True, they’re better than most of the Euro area, but that just means they don’t suck as bad.
Still, Germany gets a bad reputation through no fault of theirs, sort of……
The subtext is that since the Germans are the main bailout contributors and have most to lose in any collapse of monetary union, they must ensure that their partners cut their deficits, implement reforms and avoid mistakes that could sink the euro.
Well that’s true. Of course, no one is to blame other than the leaders of Germany. They’re the ones who thought it was a good idea to make their currency the same as Italy’s, Spain’s, Greece, etc…… Who couldn’t see how that was going to turn out?
This leads us to some that French President Francois Hollande said, which should be heeded. Yes, I know, but a broken clock is right twice a day…..
“Prolonging austerity today risks not achieving a reduction in deficits but the certainty of making governments unpopular so that populists will swallow them whole when the time comes,”
Of course, this isn’t entirely a correct statement, but the warning is very real. And, this is the problem with the Euro zone.
For the nations in economic trouble in the Euro zone, they like to blame the Germans for the supposed “austerity” enforced. This isn’t an invention of the Germans. This is reality. When Greece ran out of money they had no choice but to do one of two things. Either enforce austerity, because, they had no more money, or find some suckers to give them more money to spend. They chose the later. But, that isn’t a solution for perpetuity. The money comes from the Euro nations which have extra money to spend. But, they’re not going to do this forever. I think they would if they could, but there’s simply not enough wealth creation going on to support all of these failed nations. So, reality implements austerity, not the Germans. They’re just the messengers.
But, this brings us to what Hollande said. Many Europeans reject the notion that there is no magic money tree. Typically, they’re very poor at math and have no idea how wealth gets created. They simply want it distributed to themselves.
As things stand now, it doesn’t matter if the nations of the Euro zone implement austerity or they simply keep spreading the ever decreasing amount of wealth around, the spiral to oblivion takes the same path. The can continue to take from the wealthier nations to support the unsuccessful ones. This will simply lead to the collapse of the wealthier nations. Or, the governments can restore themselves to fiscal solvency.
But, the people of those nations reject the notion having to earn the wealth they crave. They believe jobs should be guaranteed regardless of the industry health. They believe in early retirement ages regardless of the demographics. They believe they deserve rather than they should earn. Until those beliefs change, there’s nothing to be done. Germany, currently, isn’t a model of success, like most nations around the world, Germany is simply a model of slower failure. And as far as changing those beliefs, currently I see it as nearly impossible. History and a view of the various cultures tell us this. Germany can save herself, but, only if they cut the weight of the Euro zone. I don’t think they’re willing to do so. Greece, Spain, Italy, and even France, and others, they’re unwilling to change.