Panic on the streets of Berlin. Panic on the Streets of Dusseldorf. Fuck the Germans, Fuck the Germans, Fuck the Germans (Die Schmidts)
The unpleasant truth behind the racist German rants about lazy Southerners, is that Germany is the only country that has truly benefited from the Euro. It had an overly strong currency that was killing its exports, particularly in a Europe of currencies that continually weakened against it. The Euro gave everyone else Germany’s currency and let them borrow (from Germans) to buy German goods. The currency was much weaker than the DM because of the flakes they let in, like Greece, and so exports outside Europe picked up too. This artificial enhancement of German competitiveness not only boosted Berlin’s coffers, kept debts down and employment up, it made it impossible for the rest of Europe to re-structure its industry. With the same currency but worse fundamentals and none of Germany’s headstart, how exactly was Portugal supposed to create the next Siemens or Volkswagen?
The hypocrisy of using an effective devaluation to regain competitiveness and a breathing space in which to improve productivity by imposing rules on others which forbid them the same luxury should be obvious.
So in the good times, Germany wins. And also in the bad times. Then, Germany retains its pre-Euro status as a safe haven. It has saved at least €20 billion in interest costs just since 2009 as investors have piled into its bonds. And those low borrowing costs mean it profits from any bailouts too, lending to bailout countries at 4% or 5% while borrowing at 2.5%. That lending by the way means that Greece’s debt will actually keep rising until at least 2014. So much for the good Germans forgiving debts.
At the same time as criticising ordinary Greeks, whose wages would make them paupers in Germany and whose working hours are among the longest in Europe, Germany forgets that it was the failure of France and Germany to stick to the Maastricht criteria in 2003 (as well as their wilful blindness to the state of periphery countries before Euro entry) that paved the way for others to break the rules.
As for lazy Southerners, check out the wages and working conditions of Germans. It’s easy to objectify the Spanish and the Greeks from the comfort of a luxury spa in Bad Scheisseburg.
And the falling rates that Germany bequeathed the rest of Europe and which they should be so grateful for? Well, as was predicted at the time, giving smaller, less efficient countries access to cheap debt caused rampant inflation, asset bubbles that destroyed their economies and a debt-based version of Dutch disease – the reliance on natural resource exploitation at the expense of developing the rest of the economy. If lenders do not impose fiscal discipline, then governments are free to borrow and paper over the cracks in their economies, rather than being forced into painful restructuring. Again it is hypocritical to criticise markets for lending then and refusing to now. And it is hypocritical to say that those governments should have restructured anyway: these are democracies and you don’t win power by asking the turkeys to vote for Christmas.
What now? Well, one way would be for the odd man out to fuck off. If everyone else is a profligate flake, then let’s kick Germany out of the Eurozone and have a weaker but still global currency, a bit like a new Sterling. The devaluation gives us the breathing space to restructure, and only Germany’s banks take a hit because only they now have a big currency exposure.
The other way to look at it is that the Eurozone is now like a huge poker table with a fat, sausage-eating gentleman at one end who has used sleight of hand to take everyone else’s chips. If he insists on saying he didn’t cheat, and keeps the chips, the other players will starve. What then? Well, they won’t be able to play anymore so he’ll eventually run out of money anyway. And if they starve, and he doesn’t give them enough for food, then they’ll probably kill him. Surely the sensible thing to do in that situation is to say, “I was only kidding. This is how the trick worked, funny wasn’t it? But we’re still mates, aren’t we? Here’s your money.” That way, just maybe, the other guys realise just how close they came to starving, and change their gambling ways. And the fat man stays friends with people whose goodwill and relationships he needs to survive.
So how to make that speech Merkel, you lying, hypocritical physicist, you cold, moralising, unfuckable lard arse?