Germany: punishes Europe for World War losses

Perhaps, Americans can better relate to the European crisis if they cast Germany in the Wall Street [1%] mode. Wall Street castigates the Club Med [99%] for profligate living using their homes as ATMs. The German govt [GOP] believe the 'immoral' 99% deserve punishment in the form of a Great Depression.

Perhaps the worst of the policy errors during the post-World War I period was the insistence of the Allies that Germany pay war reparations — reparations that went far beyond anything that the defeated Germans could afford. As the victors, the Allies felt that it was only fair for Germany to pay for the terrible war it had waged, and they didn’t much care about whether such payments would cripple the German economy.

Which, of course, they did; by the early 1930s, the country was effectively bankrupt. And the Allies’ unrelenting demand for reparations bred immense resentment among the German people. There is not much doubt that this combination of public anger and economic distress helped facilitate the rise of Adolf Hitler.

Today, it is Germany that is making policy moves that seem insane. Locked into their modern-day orthodoxies, German politicians look at Greece with something akin to contempt. Aid to Greece — aid that is given grudgingly, when it is given at all — must be accompanied by severe austerity measures, the Germans believe, because the Greeks need to learn how to live within their means, the way Germans do.

For months, Germany has strongly supported the European Central Bank’s unwillingness to do the one thing that might have stemmed the euro crisis: buy and guarantee large amounts of distressed sovereign debt. When I asked Martin Wolf, The Financial Times columnist whose crisis coverage has been indispensible, why the E.C.B. was reluctant to act, he theorized that it “accepts the German view that monetizing government debt is inherently immoral.” As a result, though, what should have been a small crisis centering on Greek debt has turned into a full-fledged European contagion.

You would think that all of this would be obvious to the Germans. But it is not. Germany can’t get past the fact that it is being asked to bail out “club med” countries where no one pays taxes and everyone retires at the age of 50. From the German perspective, it doesn’t seem fair. And that overwhelms even the most powerful economic arguments that bailing out Greece and the other distressed countries also helps Germany.

The Germans, of course, are hardly alone in allowing their sense of righteousness to get in the way of sensible policy. 

Joe Nocera, The New York Times

Perhaps, Americans can better relate to the European crisis if they cast Germany in the Wall Street [1%] mode. Wall Street castigates the Club Med [99%] for profligate living using their homes as ATMs. The German govt [GOP] believe the 'immoral' 99% deserve punishment in the form of a Great Depression.