Germany and Greece

It would be nice if someone wrote a piece about the Germans starting with the words "thank you".
Thank you for being responsible
thank you for being productive
thank you for being patient
thank you for for spending your money on incompetent politicians in[insert country here: Greece/Spain/Italy/France/Portugal/Spain]

You are really obsessed with your reckless spending ideology and a huge ignorant, influenced by a huge portion of jealousy which I personally enjoy. You prove that you don't even know what "beggar thy neighbour" means and what it is, but you are good in spreading hot air.

P.S.: Trade surpluses are the result of a competitive economy, but that's not a secret, only morons don't know that. If you need a basic lesson in this topic, Kenneth Rogoff can tell you something about it: Question: "The southern European states accuse the Germans of exporting too much. Do they have a point?"
Rogoff: "That is absurd. Portugal's and Spain's problem isn't Germany, it's China. The south Europeans have to understand that they cannot maintain their current standard of living in the context of globalization without significant economic reform. There are great opportunities for those who can adapt to the new realities."

Source: http://www.spiegel.de/international/business/0,1518,816071,00.html

Mr. Schauble (and Germany in general) is shocked to discover how a successful German policy of beggar thy neighbour has now resulted in beggared neighbours. Siphoning 100 billion a year in trade surpluses from the periphery has necessarily led to the failure of those periphery economies. This outcome can only be astonishing to those who think their trade surpluses come from heaven and are not (by definition) made up from other peoples trade deficits. Germany only provides net supply to the eurozone market and now says that everyone else must do this too. In a market 90% of whose trade is internal (i.e. intra EU trade) the magic thinking which will allow all members to be net contributors to supply with nobody contributing any net demand is of a piece with the imbecile policy position pushed by poor bewildered Mr. Schauble.

Mr. Schauble is also infuriated that his prescription of fiscal austerity has killed its Greek patient. Again his addiction to magic thinking is the heart of his problem. The engineered collapse of government demand via austerity cuts has further reduced overall demand in Greece, Portugal, Latvia and Ireland and shattered their growth, devastated their tax revenues and thereby reduced the capacity of both their economy and their government to pay its bills whilst leaving the value of their debt serenely untouched. A more self defeating and comprehensively destructive policy could not conceivably have been devised.

The plaintive German cry that Europe and the world must be re- made to conform with the shibboleths and old wives tales that they themselves employ as a substitute for modern economic thinking is another surreal demand.

Of course all the failures caused by his economic barbarism inevitably lead Mr. Schauble to perform a seamless segue into political barbarism. Greece must be placed under the control of a foreign commissar, political leaders must all sign blood oaths to comply with the destructive stupidity forever, elections must be “postponed” so that Greeks who must pay get no say. Taxation without representation is the brave new world produced by Mr. Schauble’s greedy little ideological gremlins.

There is therefore no great mystery to Mr. Schauble – his European Id and German super ego are not actually competing for control of a complex statesman. No, his is just the old old story of the complete inadequate who is way too far out of his depth and is now reduced to splashing around in ever growing desperation....

How about checking facts first? Afterwards have a tee and calm down. Then write a comment

Absolute rubbish. A bad summary of other people's flawed theories.
- A) Germany does not have a "Export" economic policy. German companies are producing incredible products because of their superior education and craftsmanship. Those companies have always responded to currency appreciation with "process optimization" and enhanced quality. Therefore to accuse Germany of "beggar-thy-neighbor" is unfair. Those neighbors have simply lost based on fair competition. The solution to this is to buy Fiat instead of Mercedes. Not a big deal.

- B) The Greeks have proved for 40 (or 150 years) now, that they have no clue how to run a society. Germany surely has had 12 unspeakable years, that she will always be reduced to, but for nearly 65 years the Germans are one of of the most democratic countries in the world, with worker rights and a free market economy that is putting other countries to shame. The political class in Germany is surely one that knows a thing or two about running a country.
In contrast, the Greeks have elected inept politicians for nearly 3 decades. As Ben Franklin said: "When the people find that they can vote themselves money, that will herald the end of the republic."
Well - that end has come for Greece now...

C) To accuse German elected politicians of barbarism is pretty weak, given that they shell out 60+ billion EUR of their electorate to help a country of chronic tax evaders and corrupt civil servants.
Greece has been doing PRO-CYCLICAL Keynes for more than a decade, growing only through increased government spending and crowding out private economic activity.
Keynes would have burned his books if a country had 200% debt to GDP, beacuse there is no way you can then justify further debt-dueled spending.

D) The Germans have pulled it off already once, and dismantled the Eastern German economy to rebuild it from scratch. The problem is that you need to break down the inefficient structures in the economy and -even more so- in the Government to be able to rebuild it in a way that works. Ask the East germans what they thought 2-3 years after the unification when they had 24-30% unemployment.

E) It is easy to blame the failure of the Club Med countries on the Euro and the inability to devaluate. If Exchange rates were so fundamental for a countries success then Italy would be the richest country in Europe and Switzerland the poorest, as the CHF always appreciated against the currencies around it.
The truth is that devaluation very quickly appreciated by the markets and they factor in the exchange rate related cost. For a country like Greece with few natural ressourcesa and where there is nothing left to export apart from stuffed olives, a devaluation of a new Drachma would mainly mean that fuel, drugs, machinery - everything the country needs to import would get incredibly expensive. This would leave Greeks with less real income, pretty much what Austerity is all about.

F) The real reason why Southern Europe is struggling is Asia. China has taken over the production of clothes, shoes and low-tech goods that were still made in Southern Europe a few years ago.
Tyres aren't produceed in Greece now, but in Turkey. Washing machines went to Bulgaria, even the olive production North Africa is now far bigger then in Greece.
Greece is a vistim of the Globalization. And instead of standing up to the challenge they complain, accuse, insult and ignore the situation.
The money that is missing in Greece is now invested in Asia. And I don't see why it should be coming back...

A very interesting piece! I very much agree with the fact that, while maybe the last Europhile in Berlin, Mr. Schäuble is still - first and foremost - German finance minister. His constitutionally defined responsibility and duty is to the German people. Of course it is in the German interest to save the euro and thus to save Greece, but the balancing act Mr. Schäuble is performing should not be underestimated. Moreover, I think that it is a shame for people in the 21st century to not remain objective, but to resort to cheap nazi comparisons. I sometimes wonder how this is supposed to be balm for the battered soul of Greece...

Let us hope he IS the last Europhile. The EU is a failure, as people will always place their country first. Empires always collapse into fragmented regions.

@ A J Maher

With all due respect, I'm not entirely sure that what you write makes much economic sense. "Siphoning 100 billion a year in trade surpluses from the periphery" is a colourful expression, but its exact meaning is perhaps less than obviously clear. Of course, you are quite right that "trade surpluses are (by definition) made up from other peoples trade deficits". Yet, it's just as obvious that a trade deficit implies (also by definition) an absorption of resources by the deficit parties, and not the other way round. Indeed, the basics of national accounting show very simply and clearly that you cannot have an excess of imports over exports unless you are devoting to internal uses (for domestic consumption and investment) more than your produced income: something that many people might be very glad indeed to be in a position do. In any case, what this goes to show is that — as far at least as current resources are concerned — the "siphoning" inevitably goes the other way round, relative to what you would appear to suggest.

So — to be rescued out of sheer nonsense — your "siphoning" must be referring to some other side of things. Actually, to be in a position to have a deficit and absorb other people current resources — without mugging them or getting gifts — you must be selling assets, either the control of some part of your stock of productive capital, or else — more commonly — money or your paper IOU's: in any case, claims on your future production. That too is obvious by the definitions, and is just the capital-account complement of your trade deficit. Thus, to be able to export more current goods than they import, the Germans must provide some of their savings to the "periphery": indeed, they must also export capital. So the "siphoning" is not of current resources, but actually of claims on future ones, to be produced (perhaps with the help of the currently moved capital) within the "periphery" itself. At the same time, however, the present flows — both on current and capital account — are still from Germany to the "periphery", allowing the latter better standards of living (and investment) than they would enjoy otherwise.

So far so good. But then, where is the problem? You say that "Germany only provides net supply to the euro-zone market and now says that everyone else must do this too." Really? Have another look. What the Germans appear to be actually saying is that — before accepting new IOU's — they would like some hard assurances that they will not be swindled out of their existing and dearly bought claims, as the Greeks are still trying hard to do. They object to their past capital exports being unilaterally turned into free gifts, and so threat to cut any new capital export (and hence their own trade surplus) should that occur.

Can you really blame them? Of course you cannot. That must be why you are messing up things with your muddled "siphoning" thing, duly propped up by a full array of rather emotional expressions.

Please stick to the celebrity pages of your Daily Mail.

Karolos Papoulias, the Greek prime minister, shouted in the parliament: “Who is Mr Schäuble to insult Greece? Who are the Dutch? Who are the Finnish".
His hate speech against all those who actually help his country, and the support he enjoys for this racist vulgarisms among his country folks, show that this country (Greece) isn't worth the help it receives from hard working Dutch, German, Finnish citizens.
The Greeks have deliberately committed fraude in order to enter the EURO and prpfit from the hard work of others, even those who are less wel-off like the Slovenians, Estonians and Slowaks, who were the forst to rightly recognize the unjust deal in this bailout.
Greecs had many rich citizens, magnates from the world of marine logistiscs and tourism, and the Orthodox Church, all exempt from the duty to pay any tax. If the Greek government doesn't want to tax its own billionaire citizens, and prefers to spit us into the face while we help them, and if the Greeks don't want to work harder, they simply should be compelled to leave the EURO, and possibly the EU.

“...defeated enemies so generously and benevolently as the USA did to Germany and Japan.” --- LOL (although the truth is far from being puerile humor or laughable at all)!

The formal dissolution of the USSR on December 25, 1991, and the so called Perestroika caused its leaders to admit to the murder of millions of German POWs in Siberian labor camps during and after the Second World War.

But what about the (still suppressed) figures of the mass-deaths of
German POWs in U.S. controlled detention camps under U.S. General Dwight Eisenhower after the Second World War?

There is strong evidence that Eisenhower intentionally caused the deaths by starvation or exposure of around a million German prisoners of war held in Western internment camps after the Second World War.

A research publication by Emmafinney's supposed 'fellow-countryman', the eminent Canadian author, James Bacque, of Toronto, which is titled OTHER LOSSES, does not picture America and her allies in "sherry's" favorable light. The works has had an amazing reception in Canada and is meanwhile translated into 14 languages, although the people of the United States, for the most part have been kept in the dark about one of the most heinous episodes of World War II since the book is still suppressed in the United States.

This collection of eyewitness reports, military archive material and statistical data of the IRC reported on September 12, 1989 the following, in part:

"...it is hard to escape the conclusion that Dwight Eisenhower was a war criminal of epic proportions. His (DEF) policy killed more Germans in peace than were killed in the European Theater."

"For years we have blamed the 1.7 million missing German POW's on the Russians. Until now, no one dug too deeply ... Witnesses and survivors have been interviewed by the author; one Allied officer compared the American camps to Buchenwald."

"Other Losses charges that hundreds of thousands of German prisoners who had fled the Eastern front were designated as "Disarmed Enemy Forces" in order to avoid recognition under the third Geneva Convention, for the purpose of carrying out their deaths through disease or slow starvation. Other Losses cites documents in the U.S. National Archives and interviews with people who stated they witnessed the events. The book claims that there was a "method of genocide" in the banning of Red Cross inspectors, the returning of food aid, the policy regarding shelter building, and soldier ration policy." (Wikipedia)

Through the KGB's archives in the 1990s, Bacque's continuing research confirmed the earlier estimated death total of the POWs in western camps.

What annoys me most is the fact that Schaüble never criticized his Greek conservative colleague Karamanlis when he was caught cheating on Greece's reports of its deficit with the connivance of Lehman Brothers. Has anybody every sought Karamanlis and his financial advisors for responsability on the effects of their dishonest manipulations on the Eurozone during times of economic crisis?. Definitely not!

Talking of statistics, it would be interesting to know the proportion of participants on this blog who are American rightwingers with no personal stake in Europe and not much knowledge of it either.

Greece put itself in the "splashing pool of desperation" before austerity was demanded by Germany.

Reading Charlemagne's entry again, two passages caught my attention:

1. "The FT's Quentin Peel recently had an interesting piece on the reasons for Germany's rigidity: Postwar Germany is both profoundly provincial and committed to Europe".

Why is the German government's unwillingness to assume other people's debt "rigid"? Are you "rigid" Charlemagne, because you don't give your credit card at free disposal to your irresponsible neighbor, quasi as gratification for him calling you "a Nazi"?

C'mon, Charlemagne, you aren't such fool!

2. "Still, Mr Schäuble's claim that the euro zone is ready for a Greek default sounds implausible. Last year European politicians were bending over backwards to avoid any sort of default, lest it destabilise the whole of the euro zone."

You have to learn to read German 'diplomatic language' (buy a good biography on Bismarck for a start).

European politicians might have been "bending over backwards", but surely NOT the Germans. Already in May 2010 Merkel was ready to let Greece loose. It was Sarkozy who threw a tantrum during the May meeting, which made Merkel soften her tone on Greece.

What Schäuble is saying is that Germany is ready for a Greek default! And that Germany would, if necessary, abandon the euro before accepting joint debt obligations.

Again: Learn to read "German diplomatic language"!

Despite that Greece's billionaires are hardly taxed at all, Greece's per capita GDP was $29,900 in 2011. In contrary, the GDP per capita of the EU country Bulgaria was $6,334(!!), and Rumania's $7,542(!!). They would need EU solidarity more urgent, and not rich Greece which is additionally flooded with hundreds of billions of bail-out money.

Greece can spend as much money as it wishes . . . but then it must stop asking other countries to pay for it!

When Germany and France were slightly over the deficit limit, they didn't ask Greece or anybody else to pay for it. They kept it their 'private issue'; but Greece demands that others pay for its overspending (spending more than it earns). Greece is bankrupt, but refuses to default and leave the Euro. That's the decisive difference. No conditions are asked on how Greece spends its own money, but conditions are rightly set for money that is handed to them.

As suggested by Germany and others, Greece should default, leave the eurozone and reintroduce its own currency. Then it can do its own bidding and print its own money. As simple as that.

A J Maher
Your post is a bit long, I hope you don't mind if I summarize:

- since the south stopped to constantly impoverish themselves by devaluations they keep buying German products although they can't afford them.

- The German economy didn't grow in the past because their capital went to "investments" in the south. - Although most countries in the world grave to attract foreign capital, being flooded by foreign investment is a horrible thing if it's German money.

- Now this "growth machine" for German exports stopped because Germans impose punitive 4%-interest rates on others when the markets would easily lend them at 20% with no evil German strings attached.

- Now that the Germans killed the economy of their selfless customers the Germans are economicly in dire straights and cry like babies for the Keynesian medicine....well....wait. [cancel that point, but it will come for sure].

- Now Germans must pay (naturally). Otherwise the others can always threaten them to impoverish themselves by constant devaluations. Germans will be as poor as they were with the DM in the 80s.

Emmafinney wrote: “...defeated enemies so generously and benevolently as the USA did to Germany and Japan.”

...........
Lies! Tell us more about “labour camps” in the US and Canada where innocent civilian of Japanese or Italian origin were herded and subjugated during the war. Do not be hypocrite educate yourself about that...I can give you locations of those labour camps.

"Your" banks? Are you stoned? You are not only lacking understanding of the situation but also knowledge which country's banks are heavily involved in Greece.

Our correspondent's metaphor about Germany playing the strict father in the house of Europe is an apt one. The Greeks must grasp their very child-like dependency on the rest of Europe for financial bailouts.

Like a sullen teenager, Greece has the option of moving out. The imposed austerity may not be fun, but without Daddy paying the bill Greece would be out on the street on its own confronting real hardship. If the cutbacks look bad now, I shudder to think how bad they would be if Greece had to pay their own way.

Everybody complains that Europe is just kicking the can down the road. Perhaps that isn't such a terrible idea. In the aftermath of the last financial crisis and with the rest of public finances in peripheral Europe looking so vulnerable, it might just be enough to buy a couple of years for the rest to recover and strengthen to the point to withstand Greece moving out of the house of the Euro.

If I had any say, I would use the threat of more austerity to buy even more formidible structural reforms instead of just more of the budgets cuts, which have the potential to pay off even more than the short term spending cuts in greater potential economic growth and bettter long term tax revenues.

But is it realistic to try to get Greece to buy more economic reform in exchange for a little less austerity? And are the Greek voters buying?