Sometimes it is not just the numbers. The human factor and historical imperatives need play their role in policy formation.
Unquestionably, the financial impasse in Europe today has historical foundations. A prosperous and diligent Germany is called upon to relent its rigid financial determinants to relieve the regional economic pressures, to in effect underwrite the noble experiment of a now faltering Europe. The Germany being asked to step up and take the risks inherent to underwriting the enterprise of 'Europe' has a memory writ large of financial excess and mismanagement. The destructive inflation of the 1920's was a primary factor that brought about the societal upheaval permitting the ascent to power of the National Socialists. The rest, of course, is history.
What seems to have been overlooked was that the inflation and German economic mismanagement of that period was instigated in large measure by the rigid demands of the Versailles Treaty imposing on Germany's war torn economy reparations it was not in any position to accommodate. The printing press was, at that time, the only solution and the devastating hyperinflation that resulted has left an indelible scar on the German psyche, and in turn one can assume, plays a profound role in today's financial policies.
Yes, the printing of money was the end result, but the fundamental cause was the intransigence in the enforcement of the Versailles Treaty, an intransigence that led to Germany's economic disaster and in turn to Europe's greatest carnage with the loss of millions upon millions of lives. It was In pained reaction to these events that led to the vision and formation of today's 'Europe'. It is this grand vision of a united 'Europe' that the financial crisis is threatening to dismember. It therefore becomes more than ironic, bordering on the frightening, that history would cast Germany as the nominative 21st Century 'Versailles Treaty' enforcer, a treaty that was meant to bring to an end to a war that was meant to "end all wars"
Yet, there was/is another moment, another time, another Germany. It is the moment that the new postwar Germany undertook its greatest risk, financial and human, and achieved an extraordinary triumph on a human, historical and now economic level. The Reunification with East Germany was an act of magnanimity still not fully understood outside the borders of Germany extant. To absorb 18 million fellow Germans from an impoverished, underdeveloped landscape, and to support them freely, unstintingly to help them to reach the economic and societal norm of the their Western compatriots was an act of such magnanimity. It has been rewarded with a flourishing landscape of economic achievement and societal well being. It has turned Germany from laggard, often described as the "sick man of Europe" in the early 1990's, having undertaken the gargantuan task of unification, to becoming the economic behemoth that it is today. Bloomberg BusinessWeek in its cover article, "Best Merger Ever", would state unequivocally:
It's no exaggeration to say that the contours of the Western world as we know it today were forged by German unification. As a result, the European Continent is more peaceful and unified now than at any time in modern history.
Yes, unification had its difficult moments. Initially the introduction of the Deutschmark on a 1 to 1 basis into the newly unified States of what had been the German Democratic Republic, had a devastating impact on East German industry, making their manufactured goods suddenly unaffordable outside their borders and all the societal dislocation that entailed. Yet Germany was unstinting in its support, committing well over the equivalent of $1 trillion to the reunification project. As the former West German President Richard von Weizsacker was to declare that the rebirth of a united Germany was the "the most moving experience of our lifetimes."
The sinews and commitment of "Germany's Reunification" is the lesson that deserves to be emulated. This is the lesson that went far toward restoring the self confidence both of a German nation and a German psyche, traumatized by the earlier events of that century. This is the moment once again, in the spirit of that example, for today's Germany to step forward.
For Germany and for Europe, much more is at stake than simply the balance sheet of the European Central Bank
Follow Raymond J. Learsy on Twitter: www.twitter.com/raymondLearsy
Not sure I understand the point here. That the Treaty was not enforced enough or was enforced too much? Other opinions?
Sorry, but as a German I think that is an utter myth. There are barely people alive who remember the hyperinflation of the 20s or between the end of WWII and the introduction of the D-Mark.
IMO, it'd be rather prudent to just look at the experiences people made over the last, let's say, three or four decades. So, yes, the D-Mark was a symbol closely tied with export championship and the economic recovery of modern Germany. It also played a role in German Reunification: One of the slogans used in eastern Germany was: "If the D-Mark doesn't come to us, we will go to the D-Mark".
At the same time, when traveling abroad (for holiday) as a German you noticed that other currencies were weaker; especially the Lira and Peseta had a kind of bad reputation.
If German economists, politicians, business people AND union representatives or social justice advocates are opposed/reluctant/skeptical about inflating debt because of real impacts that has: For an export oriented, low natural resources economy like Germany price stability is extremely important to calculate profits/ the price tag of long term production.
On the other hand, inflation drives up especially food and basic consumption prices which hit the poor and low incomes the heaviest. It also melts away the small savings. The wealthy/ high incomes on the other hand can hedge against inflation on the international capital markets.
Secondly, and that touches exactly what you say: The question of bailouts or rescue mechanisms is one thing, but as we see on a daily basis we must urgently and simultaneously rein in the financial sector or else all the money made available will just "trickle up" and feed the financial sector with no relieve for the "real economy". That kind of policy is opposed especially by the UK and US. They hope that sooner or later the money will flow into their banks.
I think Germany and the other five should be much more clear in their message: We are only willing to contribute with our economic force to stabilize the global financial if we get the regulations and revenues we seek from that sector. In particular, the UK as part of Europe and seat of the lion share of European banking must get on board.
1) German citizens agree to join a full-blown Eurocratic Nanny Zone (ENZ) giving up sovereignty on nearly everything that matters.
2) The Eurozone breaks apart.
There are no other choices, only half-way proposals to temporarily forestall the inevitable. Either way, there will be much pain for Germany.
If I were a German I would expect my country to exit the Euro and let the chips fall where they may.
That was a fault, obviously.
We need it in US again to re-build our own country.
Today Germany is in a position it has not chosen to be in on purpose. Too many countries in Europe expect too much from us. Merkel gets a lot of heat from other leaders in Europe of being too dominant. On the other side they don't seem to have the balls to lead. Merkel tries to help to get a decÃsion that would serve Germany and Europe, but not on the account of Germany shouldering everything. The UK brings back strong anti-German vibes in their media. It will be interesting to see how it goes in the near future. One thing is clear, Germany, embedded in the NATO and the EU is definetely no threat to its neighbors anymore.
My understanding is that Germany, and german banks, were way too eager to provide cheap credit to some weaker european states. So they do have a substantial responsibility.
For example: Deutsche Bank gave credit to Greece to buy German submarines for a few 100 million Euros. Now one has to ask, why in the world has Greece to be armed to the teeth when their economy as a whole is in dire straits ?
I think it is wrong when Greek people are denounced as being lazy, when in fact it was banks, greed and a few corporations that made a fortune that caused their downfall.
The losers were the industrious citizens whose savings (often in the form of government war bonds), were destroyed. This was no coincidence, but policy, they benefited and could blame the pain on foreigners.
Austerity will lead to social unrest which will help no one. No one will be protected if the financial system collapses. Not even Germany.
Because all in all, if we take stock of our abilities, then these abilities lie in the much higher degree of industrialization/ share of the Secondary Sectors on the balance of the EZ economies. I think the whole EZ banking combined is much, much smaller than the banking in the UK alone.