Germany would be better advised to look soberly at its own economy
Germans are thought to be more reluctant to use their credit cards than, say, the spendthrift British. They have a conceptual hang-up about credit which in derisive slang they call Pump (tick in English). Memories of their 1923 hyperinflation still lurk in Germans’ psyche. Post-WW2 debt forgiveness for Germany prevented a repeat of the 1923 disaster and arguably laid the foundations of the Wirtschaftswunder. Few Germans recall that the 15th century Fuggers of Nürnberg never had such complexes about credit, and that their lending trade underpinned much of Germany’s future prosperity. There is no reliable evidence that remitting some of Greece’s debt (the “perpetual” and tradable bond solution comes to mind) will cost German taxpayers a Pfennig.
Greece’s new government has a number of available opportunities, and seems to recognise them. It seems determined to do something about tax collection and avoidance. In the name of austerity, it had cut the number of tax inspectors by 14% leaving it with one inspector for 1127 citizens, compared to Germany’s one for 730. Contrary to rumours, the Syriza government does not seem to be unselectively giving sacked public servants their jobs back.
Greece’s new government has a number of available opportunities, and seems to recognise them
Greece’s new finance minister Yanis Varoufakis clearly understands that curbing debt – both past and future – is a top priority, and he wants to fight corruption. EU leaders must understand that there is no quick fix available to Greece. As the OECD’s Secretary General Angel Gurría, has been reminding everyone, the stark options on debt are a managed rescheduling or an anarchic default.
Germany, meanwhile, would be better advised to look soberly at its own economy. Berlin should aim to first, scrap the misplaced constitutional obligation to balance government spending and revenues. Germans need to consume more, while reducing their balance of payments surplus. Second, do something about the dreadful state of the country’s infrastructure, which carries in it the seeds of Germany’s future serious economic misery and declining competitiveness. That should be the prime dolg of Chancellor Merkel towards her own economy as well as an exemplary display of European duty.
- Berlin v. Athens: The battle of wills has become a battle of principle
- Greek debt: Syriza cannot win a game of chicken
- Germany’s Goliath versus Greece’s David by Giles Merritt
- Inside the mind of Syriza by Yanis Varoufakis
- Syriza’s big win: The plus and minus sides by Giles Merritt
- The Greek crisis: Be flexible on debt, but intransigent on reforms by Leszek Balcerowicz and Andrzej Rzońca
- High anxiety in Brussels, austerity fatigue in Greece, and the danger of contagion by Howard Davies
- Greece: Are more bailouts inevitable? Not if Syriza wins by Graham Bishop
- Greek crisis: Fire the Troika, and then what? By Michalis Sarris
- Greek showdown: Continue EU’s hard line? Or a middle road with quantitative easing? by Waltraud Schelkle