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RandySF

(59,031 posts)
Mon Feb 23, 2015, 02:52 AM Feb 2015

Who Made Germany Europe's Boss?

Germany is Europe's biggest and most successful economy, accounting for 29 percent of the euro zone's output and 24 percent of its population; its voting power in various EU forums is weighted accordingly. It's also Europe's biggest creditor, which gives it special standing (and a huge vested interest) in negotiations about public debt. Constitutionally, though, it's still just one nation in a euro system of 19.

Because of its size and strength, it can and should lead. It has no right to dictate. And if its leaders were wise, they'd avoid arousing the suspicion that they were trying to do just that.

Recently Germany has often appeared to direct policy at the European Central Bank, on banking union, on Greece, and on many other politically freighted topics. It has seemed to presume it's in charge. Europe's other governments and various policy-making bodies are much to blame in this, because they've acquiesced.

Heaven knows, Europe needs stronger leadership -- but Germany, at the moment, looks poorly qualified. Its policy makers are unenlightened on the macroeconomics of debt and deflation, and its officials seem unable to exercise influence with restraint or respect for all EU citizens.


http://www.bloombergview.com/articles/2015-02-22/germany-thinks-it-s-europe-s-boss-on-greek-debt

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MADem

(135,425 posts)
1. If you want to go back in history, that would be the Deutsch mark.
Mon Feb 23, 2015, 03:19 AM
Feb 2015

Now, its happy little grandchild, the Euro, calls the shots...

They follow the golden rule--he who has the gold makes the rules...! Your first paragraph pretty much establishes the playing field--they've got the clout, so they'll wave it about!

If their influence had the same weight as all those in the union who aren't pulling their weight, they'd back out of that currency arrangement so quick that heads would spin.

Response to RandySF (Original post)

TooPragmatic

(50 posts)
5. Germany does attract most of the attention
Mon Feb 23, 2015, 05:45 AM
Feb 2015

because of their position as the largest and most successful economy. A lot of smaller countries do support Germany, but don't want to get a lot of the heat when it comes to blame. Estonia, Finland, the Netherlands, Slovenia, Latvia etc. support Germany when it comes to many positions. The ECB does follow Germany a bit too much, but many of the decisions when it comes to low interest rates and QE is something that the Germans have opposed. ECB needs to focus more on other factors than just inflation.

I personally hate the North-South divide in the EU and countries should be more open to a more straightforward integration in the EU where it doesn't just model Germany. But people still like to think Germans as Nazis and represent Germans as evil because of history. Our culture perpetuates this stereotype. But I do think that Schäuble is not the best person to negotiate a deal with Greece. He seems to look down on the Greeks and doesn't show any respect to them. I think Greece should be part of the EU and they do deserve our assistance, but so does everyone else and I don't like the way people construct the discussion when it comes to solving problems in Europe.

DFW

(54,415 posts)
6. Germany doesn't want to be anyone's boss
Mon Feb 23, 2015, 06:33 AM
Feb 2015

As one who lives among them and is married to one, I can tell you this is one of the most pacifist nations in Europe. They know what it means to have a leadership hell bent on running the world, and they remember the consequences all too well. If anything, the Germans have been criticized in the recent past for being all too detached from happenings on the outside. To get out of what was then compulsory military service, my brother in law went without sleep for four days and drugged himself up for his physical (it worked) and he was applauded by his dad, a farmer who was drafted against his will, and got a leg blown off at age 18 after being sent to Stalingrad as cannon fodder.

What can't be ignored any more is a potential tax revolt among the German populace, and the spectre of a rising extreme right wing that would go along with it. The Germans are already heavily taxed, especially with the 5% surcharge on taxes that once went to rebuild East Germany, but is now going to be made a permanent tax hike. If it's to build roads, repair bridges, improve schools, modernize airports, supplement health care costs, no one will yell too loudly. However, if they are being asked to pour their taxes down a black hole of a corrupt and inefficient economy of another EU country that cooked its books to join the Euro in the first place, hell yes, they want a say in what's going on.

Greece used to consider tax collection a joke, allow retirement with full pension at 55, and grant all sorts of wonderful things under allaghi that were to be paid for by some miracle. Before the Euro, they could just devalue the Drachma a little more each time and print enough to pay everyone. Of course, the Germans couldn't sell many Mercedes cars to Greece that way, so they were initially all for another country adopting the euro, so their exports could find a wider market. With a Greek euro, they figured less Greeks would be priced out of buying German goods, since their currency wouldn't be devalued any more. But membership in the Euro also meant adopting some fiscal discipline, and that had never been in the Greek dictionary. Now suddenly the Greeks find they had no money left in their account, and they are pissed at the Germans for not doubling their allowance.

If your kid at college asks you for more money because he needs to buy food, you try to cough it up. If he calls and asks for more money so he can pay the bill for a chauffeur-driven car he had take him to class every day for the past year, you might have a different reaction. The Greeks spent their food money on the chauffeur-driven car, and now want the Germans to pay the bill. Their people have no jobs because their government should have addressed these problems years before joining the euro, not years later when the cupboard is bare. The new government is saying give us some time, we'll REALLY get our house in order this time. Schäuble isn't my favorite person in the German government, but I don't blame him one bit for being skeptical. The fact that Putin hasn't rushed in to try to reclaim the Russian influence that Stalin nearly got in Greece after World War II indicates that the Russians aren't any more convinced than the West that the Greeks are serious this time. Tsipiras will have to be VERY creative to come up with some solution that will appease the West as well as his own people. He certainly seems to want it, but like the French say, "la plus belle fille du monde ne peut donner que ce qu'elle a."

jakeXT

(10,575 posts)
7. Where are the indictments against Goldman Sachs ?
Mon Feb 23, 2015, 07:20 AM
Feb 2015
In 2002, Goldman Sachs secretly bought up €2.3 billion in Greek government debt, converted it all into yen and dollars, then immediately sold it back to Greece.

Goldman took a huge loss on the trade.

Is Goldman that stupid?

Goldman is stupid—like a fox. The deal was a con, with Goldman making up a phony-baloney exchange rate for the transaction. Why?

http://www.gregpalast.com/lazy-ouzo-swilling-olive-pit-spitting-greeksor-how-goldman-sacked-greece/

hack89

(39,171 posts)
9. Greece and Goldman Sachs conspired to hide Greece's debt from the EU
Mon Feb 23, 2015, 07:33 AM
Feb 2015

it is not Germany's problem. Greece can prosecute them if they want.

BooScout

(10,406 posts)
10. Exactlly!
Mon Feb 23, 2015, 08:07 AM
Feb 2015

The Greeks have never paid their taxes and will do anything to avoid giving the government a single euro. They are the joke of Europe. The EU has bent over backward to bail them out of their own mess and the thanks they get is Greece acting like they have always done......being irresponsible and trying to weasel out of their debts.

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