By maintaining a strong currency for its customer countries, Germany has, in fully aware and calculated fashion, created purchasing power for its goods. By creating purchasing power for its goods, it has locked in its own competitive advantage, allowing more investment and consolidating its industries' lead over European competitors. The anecdotal evidence bears this out completely: witness Volkswagen's completely domination compared with the healthy competition from PSA, Fiat Group, Renault, or indeed Rover 20 years ago.
"Nobody forced Greece to take on the loans". Classic simplistic, moralising, yet false axiom, and is the entire theme of the article which you clearly have not read, or understood, properly. The point of the article is that thrusting large amounts of money in front of the nose of a potential debtor is bound to create a debt, but under such circumstances that debt, when it turns bad, does not lay blame 100% at the door of the borrower. The irresponsible creditor must also take a share of the pain. That is what is Syriza's underlying point, and is mirrored across peripheral europe, and any idea that Germany (or French banks) must at all costs get 100c return on each euro of capital invested is completely erroneous. The periphery must take some pain, yes, but the usurious and/or opportunistic lender must also be punished.
As to "lay[ing] blame 100% at the door of the borrower", my point is that the money that has been given to Greece is already gone, Greece has been technically bankrupt for a while. This is understood by everybody. The questions are twofold:
1. How do the creditor countries tell their electorate that the money's gone? The modus operandi of the creditor countries has been to drag out the default over time.
2. What to do with Greece. The creditor countries want to change Greece to make it competitive. Syriza wants to keep the rest of the EU to subsidise the status quo indefinitely.
I disagree that "Germany has benefited by far the most from euro". The opposite is true. Moreover Kohl agreed with it only because without that agreement, reunification would have been vetoed by France, which is still in some sense, occupying Germany. Nobody orced upon the Euro the rest of Europe. Various EU countries (e.g UK, Poland, Denmark, Sweden) did not join.
The point is that without the Euro, these groups were shielded from Volkswagen through the ability of other governments of using devaluation as a means of improving their competitive position.
He's not claiming they were as efficient competitors as Volkswagen, but that the Euro was a benefit to Germany to consolidate existing competitive advantages that they had due to the strength of their industry, because it prevented other European countries from shielding themselves through currency policy, and thus allowed German companies to extend their already powerful positions.
To reiterate: The claim is not that the Euro in itself created a competitive advantage for Germany, but that it allowed them to take full advantage of their economic strength.
I don't know if that's true or not - I didn't follow the debate that closely - but the arguments you are giving here are either besides the point for that kind of decision, or seems like plausible concessions of a party that sees itself as strong enough to be able to win big if devaluations are taken off the table.
At that point the countries of the South (and North? Ireland..?) will keep devaluing daily, while the markets will push Germany's new currency through the roof, turning exports virtually impossible. Unemployment will struck Germany and all hell will broke loose. Repercussions for the South will be devastating of course.
That's not my preview. That's the scenario Varoufakis foresees and probably the author too. Makes a lot of sense to me, but Varoufakis might be wrong. Time will tell I guess.
Just keep in mind that Greece, Italy and Spain are in dire straits anyway so the prospect of defaulting doesn't seem all that scary.
If everyone in Europe and abroad wants to park their assets in the new stable DeutscheMark, that alone could destroy exports. In the meantime everybody around (current markets of German products) will becoming a weak buyer.
Germany used to have its own currency and did very well exporting its goods. So does Japan, so does Singapore, so does Switzerland, so do Denmark and the US.
Maybe you should read up on the situation a little, instead of believing any old populist crap you read, because those comments border on racism.
2) Sweden and Switzerland both have strong currencies and are doing fine. Greece's problems have very little to do with the Euro: Look at rankings like the Doing Business Report, Transparency International's Corruption index, rankings of economic competitiveness - in all these rankings Greece is doing horribly! Look at the ARWU rankings of top 500 Universities worldwide (http://www.shanghairanking.com/ARWU2014.html): Greece has 2 Universities in the top 500, Sweden has 11 and Switzerland has 7 (highly ranked) Universities. Look at patent filings, for example the US Patent office (http://www.uspto.gov/web/offices/ac/ido/oeip/taf/cst_all.htm): Sweden had 2413 patents filed in 2013, Switzerland had 2466 and Greece had 70 (!!!). Considering the countries comparable population size (Greece is biggest), this is a HUGE disparity!
Is it fair to force the countries importing more into idleness and destitution for no more reason than they share that currency?
If you look at the U.S., states like Alabama and Mississippi receive more in federal dollars than they pay out, where the more productive states like California are the opposite. The ecu lacks this facility.
Greece has already received billions and billions of subsidies / gifts from the norther EU countries. Is that fair? Greece has not used that money to improve its economy.
I'm not saying that Greece isn't to blame. Of course it is. But it's not a one-sided situation. Takes two to tango on one hand.
On a more important note, all the money from the bail-outs where driven to French and German banks, while Greece kept borrowing.
So the plan was not exactly to save Greece, it was mostly to save French and German banks...
The big players of Europe, mostly Germany, used the EU "subsidies" to ensure an economic policy that destroys the periphery (and makes it a short-term market for their industry) would be followed.
Just an example of similar BS continuing to this day: Germany pushes for embargo against Russia for example, which Greece follows (hampering tons of exports it had) but German companies do not (it is estimated by German sources that 80% of companies continue to do business as usual with Russia). Essentially Germany faking a moral outrage against Russia to push for its economic interests.
There are some crucial differences between Germany and Greece however:
1) Greece didn't cause the death of nearly one million Germans, due to invasion, executions, and famine. Germany did.
2) Greece didn't bomb German cities. Germany did (Greek ones).
3) Greece didn't destroy Germany's infrastructure when its army left the country (out of spite). Germany did.
4) Greece didn't force Germany while being an occyping power to give it a huge loan it never repaid.
5) Greece never denied to pay war recuperations to Germany. Germany did to Greece.
6) A couple of decades after Germany slaughtered it's citizens, Greece did send hundrends of thousands of workers to work in retructuring the German economy as cheap immigrant workers (gestarbaiters). Strange how those "lazy Greeks" (and Turks) created this "German recovery miracle").
7) Greece didn't force EU legislation and economic/monetary policy to favour its exports and industry. Germany did.
8) Greece wasn't caught bribing German politicians millions or Euroes in order to close certain deals against the Greek state's interests. Germany did. And then it offered protection to people involved in the bribes.
In general, when you have a 100-pound gorilla pursuing its interests against a monkey, it's rarely the monkey's influence that determined most outcomes...
- EU Agricultural subsidies are premarily a gift to France which benefits most from them. WHen in power Germany's chancellor Schroeder tried to remove the current EU agricultural, only to be blocked by France.
- Russia sanctions are primarily driven by the US. Germany does brisk business with Russia and tried for a while to avoid sanctions. More imporantly Russia, via the Russian armed Ukrainian rebels is invading Ukraine, leading, among other things, to shooting down Malaysian airplanes. You are saying we should ignore this, and let Russia simply have its way?
- Sanctions against Russia are fairly recent, the structural problems of the Greek economy are much older.
Re 1) Substantially more Germans died in the last century in wars than Greeks
Re 2) The allies bombed German cities. As far as I'm aware Greece was part of the Allies.
Re 3) You mean like the "scortched earth policy" of the Greek army when they were forced out of Turkey? https://en.wikipedia.org/wiki/Greco-Turkish_War_%281919%E2%8... As to infrastructure, Germany's was way more destroyed. They rebuilt it in a decade or so. Infrastructure needs continually to be modernised anyway, as infrastructure is subject to wear and tear. Note also that that other countries (e.g. Korea, Singapore, China) have risen from extreme poverty to world leadership in a few decades.
Re 4 and 5) The war reparation have been covered by various treaties over the decades (which were designed by the allies), and long been settled. Speaking of war reparations, when will pay Greece reparations for example to Turkey for the Greco-Turkish war that Greece started in 1919?
Re 6) German economic recovery, what you term "German recovery miracle", happened in the 1950s primarily. Guest workers started arriving in the 1960s. Note that guest workers came voluntarily. A more interesting question is: why do so many Greeks leave the motherland and go to the US, the UK, Germany, Austrlia?
Re 7) I'm not sure what you are referring to here. Greece and Germany hardly compete with each other. The weakening of the Euro benefits German and Greek exporters. But not that Germany has been trying to avoid this weakening.
Re 8) I'm not sure I understand what you mean here. What does Transparency International http://www.transparency.org say about corruption in Greece?
...after the gradual de-industrialization of Greece and the changes to agriculture imposed by EU directives. My sentiments exactly.
>EU Agricultural subsidies are premarily a gift to France which benefits most from them.
Sure. It's not just Germany that's a big fish in the Euro-centre pursuing its interests over the smaller fish.
>Russia sanctions are primarily driven by the US. Germany does brisk business with Russia and tried for a while to avoid sanctions.
In the EU, we see Germany pushing for them constantly.
>More imporantly Russia, via the Russian armed Ukrainian rebels is invading Ukraine, leading, among other things, to shooting down Malaysian airplanes. You are saying we should ignore this, and let Russia simply have its way?
I'm saying, the legitimate government of Ukraine was toppled to be replaced with some pro-West-interests friendly lackeys (and neo-nazis at that), and Russia did what it had to protect an area by its borders with 60% citizens of Russian descent -- which was in no way an "invasion". As for the "shooting down of Malaysian airplanes" that Russia had anything to do with the matter was a fairy-tale even worse than the BS pretexts of Bush and Blair during the Iraq war.
As a thought experiment, what would the US do if a part of Mexico was inhabited by 60% citizens of US ethnicity, and the legitimate government of Mecico was toppled and replaced with a, say, pro-Chinese government, with known racial hatred for that American ethnic minority among them?
Countries like Germany or the US, that ACTUALLY invaded places 10.000 miles away that had nothing to do with them and occupied them, mostly for oil and control of the area, are in a very bad place to talk about Russia and Crimea.
>Re 1) Substantially more Germans died in the last century in wars than Greeks
So? It wasn't Greeks that killed them. Plus, those Germans went looking for it, and exterminating millions of people in the process. More Germans died than Jews too, but I wouldn't make a big deal out of it.
>Re 2) The allies bombed German cities. As far as I'm aware Greece was part of the Allies.
Not the part that bombed German cities, as it hardly had an air force. Greece, utterly destroyed after the German Occupation, didn't even send any real army to Germany along with the rest of the allies.
>Re 3) You mean like the "scortched earth policy" of the Greek army when they were forced out of Turkey?
Yeah, I mean like that, but from an invading army that didn't have any place being in Greece at all (whereas Greece had around 1.5 million Greek population living under Turkish occupation in Asia Minor that it tried to liberate. An area, furthermore, inhabited by Greeks since ancient times, that was, like mainland Greece and most of the Balkans, under occupation by the expanding Ottoman Empire for a few centuries).
But even if it wasn't so, your example would just mean that the Greeks also owe to Turks, not that Germans don't owe to the Greeks for what they've done.
>As to infrastructure, Germany's was way more destroyed.
Yeah, when you declare nazi expansion war on the World, these things happen. Cry me a river.
>They rebuilt it in a decade or so.
Mostly thanks to being the new darlings of the West, in a cold war ploy against USSR/East Germany Europe. Not exactly "left to their own devices" and with hard work, as the myth says.
>Infrastructure needs continually to be modernised anyway, as infrastructure is subject to wear and tear.
A, so the occupying nazi forces actually did Greece a favor, destroying it's infrastructure so it could modernize it!
>Re 4 and 5) The war reparation have been covered by various treaties over the decades (which were designed by the allies), and long been settled.
Actually not settled at all, and with Greek goverments of the time (cold war puppets) forced to consign to BS deals unlike most of the other countries.
>Speaking of war reparations, when will pay Greece reparations for example to Turkey for the Greco-Turkish war that Greece started in 1919?
Greece went under financial supervision as a result of exactly that. But you seem to forget that Turkey started an ethnic cleansing campaign years before that, and that the Ottoman Empire had kept Greeks (and lots of others besides) under occupation for several centuries.
>A more interesting question is: why do so many Greeks leave the motherland and go to the US, the UK, Germany, Australia?
Because Greece, not a rich country to begin with, was left destitute by the nazis at the end of the war, never got the recuperations it should, and then, in the Cold war the followed, due to its lots of communist sympathizers, it was kept under close guard, including foreign powers organizing a full blown civil war, and helping establish friendly lackeys in place down to a full blow dictatorship in 1967. That's what happens to official or unofficial colonies and neo-colonies when the big players have their way.
>Re 7) I'm not sure what you are referring to here. Greece and Germany hardly compete with each other. The weakening of the Euro benefits German and Greek exporters. But not that Germany has been trying to avoid this weakening.
Germany with its already high exports had tried to deny any policy to weaken the Euro for ages, hurting EU countries with less fortunate import/export ratios.
>I'm not sure I understand what you mean here.
I mean that German companies, like Siemens, bribed Greek politicians / lackeys for decades to win huge public tenders, and when found the German government protected them, and even gave asylum to Greek representatives of the companies.
(a) "gradual de-industrialization of Greece and the changes to agriculture imposed by EU directives" That's wishful thinking. Can you point to the EU directives that deindustrialised Greece? You mean all the billions and billions that the EU gave Greece to modernise and to build up a working administration?
(b) "In the EU, we see Germany pushing for them constantly." No you don't. You see Germany slowing down the US who are the chief driver behind sanctions against Russia. Germany has major economical interests in Russia. Germany has also got to accommodate US demands, after all the US is still occupying Germany. Finally, it is worth noting that the German chancellor grew up under Soviet occupation. Please inform yourself about the facts rather than mindlessly reciting Syriza propaganda.
(c) "I'm saying, the legitimate government of Ukraine was toppled to be replaced with some pro-West-interests friendly" This is not the time and place to discuss what is going on in Ukraine. Let's just say that what you write here is indistinguishable from what the Kremlin says.
(d) "So?" My salient point (that you did not address) was that plenty of countries started from a much worse place than Greece and are doing much better after a couple of years. Go to South Korea some time ... Maybe look at your neighbour Turkey and see their stunning economic development.
(e) "(whereas Greece had around 1.5 million Greek populate living under Turkish occupation in Asia Minor that it tried to liberate" Look what you are doing here: you justify greek imperialism and racist wars, conveniently forgetting that lots of people living in Anatolia were not Greek and had no intention of being governed by Greece. Most countries have some of their citizens living in neighbouring territory, so what you are doing here is legitimising invading your neighbours.
(f) "But even if it wasn't so, your example would just mean that the Greeks also owe to Turks, not that Germans don't owe to the Greeks for what they've done." As has been pointed out before, and is widely known by anybody with interest in this subject, Germany paid reparations a long time ago. This has all been formalised in contracts with the allied occupiers. If you think Greece didn't get enough, please address the occupiers in charge, i.e. the US, the UK, France, and the Soviet Union.
(g) "Mostly thanks to being the new darlings of the West, in a cold war ploy against USSR/East Germany Europe. Not exactly "left to their own devices" and with hard work, as the myth says." You are channeling that odious Varoufakis guy. If you / he really belived that, then the rational thing to do would be to go to Washington (or rather the CIA headquater in Langley, where Varoufakis claims such decisions are taken) and ask for Greece to be the new darling ... and magically Greece will become the new Switzerland / Singapore. Neither you nor Varoufakis do this. In Varoufakis case that's because he doesn't believe this -- it's just easily consumed propaganda for dumb voters, in your case ...
(h) "Greece went under financial supervision as a result of exactly that." Greece didn't pay Turkey for Greece's war of imperialist agression. So your moral position is that you expect others to do what you yourself are not willing to do.
(i) "Germany with its already high exports had tried to deny any policy to weaken the Euro for ages, hurting EU countries with less fortunate import/export ratios." You clealy don't understand macro-economics. A weakened Euro helps Germany more, because Germany exports more. A weakened Euro makese German products more competitive. That aside, Greece doesn't export much to speak of to non-Euro countries.
(j) "I mean that German companies, like Siemens" I still don't see your point. According to http://www.transparency.org Greece is a lot more corrupt than Germany. You could find numerous Greek companies and individuals doing dodgy things with their money ... how much tax are greek shipping magnates paying again?
In essence you are following Syriza, and whipping up racism (in this case anti-Germanism) so as not to address your own problems. It's a well-known pattern of behviour.
The problem is that Greece doesn't export much of interest to the rest of the world. They should (and could) change that.
The answer to this problem is for the public to demand stronger financial regulations from their own government. The problems facing you (rhetorical 'you') are mostly due to corruption in your own government - they're the ones taking crappy loans. So what if you blame one other country. Cut all ties with them... and the corruption in your own government will find some other way to spend your money on their personal baubles.
If that were the problem the solution would be fairly straightforward. But it's not corruption that broke the bank. Greece simply isn't wealthy enough to provide the level of services to which the citizens have become accustomed. That's why there's no way out here. The voters will not allow the changes that need to happen for the country to become solvent.
After they stiff the Germans and after they leave the euro the people in charge will bring some sanity to the budget by printing Drachma (or whatever the new money is called) until consumption is brought roughly in line with production.
https://web.archive.org/web/20141112144203/http://www.busine...