Germans Suffer Reality Check


 

Since the Euro crisis began several years ago Germans had enjoyed a relatively strong economy based in large part on the great products they make being snapped up in emerging markets like China and Brazil.  This seemed to give many of them false hope believing that they were almost immune to what was happening to the rest of Europe.  With this sense of immunity and the fact that they have Europe’s largest economy they went about dictating ridiculously short-sighted austerity measures on the rest of Europe as the price for underwriting the bailouts appearing to believe that they would be able to whether the storm in fairly good shape.

 Well I would say that they have begun to realize that is no longer the case.  The German economy is slowing partly because of demand falling outside of Europe as China and others suffer their own economic slow down, but also because of near economic collapse through out much of Europe.  This collapse in economic activity due in large part to the austerity measures imposed by Berlin have finally impacted demand for German goods to the point of alarm inside Germany.  The Germans now find themselves in a serious mess because it is widely recognized that their policies have only made the situation worse. They committed to pouring hundreds of billions of Euros into bailing out struggling countries, and now they are going to be forced to either go all in the European Project or be blamed for causing the destruction of the Euro.

 It is a lose lose situation for Germany now because if they do what their own people want and rebuff the call for deeper integration ( code for using Germany’s good credit to help finance debt for troubled EU nations) the Euro crumbles.  If they buck what the average German wants and go for further European integration they will soon be on the hook for possibly trillions of Euros instead of just billions.  Unfortunately they have to accept much of the blame.  They chose to join the Euro, even pushing for its creation.  They also helped craft the unworkable design of a single currency without political integration that was doomed to fail.  One of the reasons Germany was inclined to underwrite the rescue was because it was often German banks that fed the credit bubbles in other EU countries so German banks stood to lose hundreds of billions of Euros if they defaulted.  When the Euro went into crisis they called the shots and came up with the failed policies that were supposed to rescue the Euro, now 2 years later you have to ask if there is anything left worth rescuing?  Already having to carry the burden for destroying Europe twice in the last century you almost feel sorry for them as they once again get ready to assume the blame for the destruction of Europe in this century.

Euro Troubles The End of Germany’s Illusions

Insane in Spain – NYTimes.com

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