Wednesday, 24 June 2015

Bailouts, beams and motes

Hours after Germany’s Angela Merkel gave a cautious welcome to Greece’s latest reform proposal, she received a sharp reminder of the depth of frustration back home when one of her own backbenchers poured scorn on the bailout talks.

Wolfgang Bosbach, a legislator from the chancellor’s CDU party — who voted against previous Greek bailouts — dismissed the eurozone’s policy towards Greece as a “financial carousel . . . which I personally don’t believe will ever come to a stop”.

Mr Bosbach told the state broadcaster Deutschlandfunk: “Anyone who now believes that this is the last chapter of the endless story of Greece, will soon be disabused.”

For an appropriate response, see Matthew 7:5 and Albrecht Ritschl, professor of economic history at the London School of Economics:
Michael Nevradakis (Interviewer): At the present time, we hear a lot in the press and the media about the German economic success story, about German fiscal responsibility, as compared to the supposed irresponsibility of the Southern European countries, such as Greece. But you have argued that Germany was the biggest debt transgressor of the 20th century. Why do you believe this is the case?

Albrecht Ritschl: Well, we can just do the numbers, and I already talked about these war debts being almost equal to Germany's economic output in the last pre-war year, when the German economy was running at full employment. So this was essentially never paid back. Plus we have Germany's internal public debt, which was all but wiped out in a currency reform undertaken by the Americans in the Western zones of occupied Germany and by the Soviets in the Eastern zones of occupied Germany in 1948. The Soviets wiped out Germany's public debt entirely; the Americans wiped it out by 85 percent. Now, if we add everything up and try to come up with a super grand total, both internal and external, wiped out in the currency reform and in the London agreement, we arrive at a figure which is roughly - this is very rough, but just to have some sort of an idea - four times Germany's national product. So to provide this in values of today, if we accept that Germany's national product is somewhere to the tune of over 2 trillion euros, which is beyond 2.5 trillion US dollars, we would be talking about a default and debt forgiveness of somewhere in the range of 10 trillion dollars. I would tend to think that this is probably unrivaled in 20th century history.
Oh, and about forgiveness for those other debts to the human race (six million Jewish lives, upwards of twenty five million Soviet ones, five million or so Poles, a million Yugoslavs, half a million or so each from France, Britain and and Greece, not to mention the six or seven million German people who died in the war started by Germany), don't mention it. No, honestly, you're welcome. All forgiven and forgotten now. I'm sure you'd do the same.

Not that Merkel and Bosbach and most of the rest of the German population, who weren't even born then bear any kind of collective responsibility for Germany's past crimes (any more than 'the Greeks' are collectively responsible for every past bit of political and economic mismanagement and misfortune that has contributed to their present troubles).

What current German politicians do share are the benefits of living in a country that owes its current prosperity to being forgiven, bailed out and allowed to rebuild itself after a hideous, colossal, self-inflicted, catastrophe.

Guys, when your nation owes that big a debt of gratitude to the rest of the world, maybe you shouldn't be quite so quick to lecture other nations, complain that you're 'losing patience' with their debt repayment proposals, or stubbornly insist that they stick to an austerity plan that collectively punishes an entire nation by systematically destroying its economy almost beyond hope of recovery.

History aside, neither the Lutheran Angela Merkel or the Catholic Wolfgang Bosbach (Protestant work ethic, my arse) seem to have been paying much attention in Bible class, either. Never mind me quoting that famous line in Matthew's gospel about hypocrisy, these self-described Christian Democrats don't show much sign of having read or understood Matthew 6:12, either..


Anonymous said...

Its not just historic debt foregiveness.The bailout money to Greece has been used to repay the debt incurred by German Banks due to their reckless lending pre financial crisis.The Greeks should have threatened to default before this transfer.How tough would Angela Merkels position have been under the threat of the German Banking system collapsing around her

Andrew King said...

Artur Fischer, of the Berlin Stock Exchange gave the game away back in January when he confirmed that 'The private banking sector has been secured.' If Syriza had come to power before they'd rescued the German and French banks, maybe the Germans - an the ECB, the Commission and the IMF wouldn't be so confident about kicking them while they're down.