The Corner

The Arrogance of Obama, Cameron & the Rest

Writing in the Independent, Dominic Lawson lets rip (my emphasis added):

….At the G8 heads of government meeting in Washington, the German Chancellor Angela Merkel was, in effect, put on the naughty seat, with all the other leaders, from Obama down, taking turns to tell her to agree to launch so-called eurobonds, effectively using the German taxpayers to guarantee the vast debts of the single-currency zone.

Leave aside that the German government has been told by its own constitutional court that it could never do such a thing, it would in any case be completely unacceptable to the country’s own public – as it would be to any sovereign people in a similar position. If anything Merkel has already gone far beyond what her electorate would have wanted in terms of guarantees. As Guido Westerwelle, the country’s minister for Foreign Affairs, told an American audience earlier this year: “The German parliament has approved financial guarantees of more than €200bn [through the European Stability Mechanism]. Translated to the size of the US economy this would be the equivalent of far more than one trillion US dollars in guarantees by the US Treasury. Can you imagine members of Congress approving such a sum to help out non-Americans?”

There is a growing fury on the part of the German people, not just as taxpayers, but also as a rapidly ageing country with an inevitably high propensity to save, at the idea that they should put their pensions at risk rather than exert pressure on their more improvident neighbours to “act responsibly”. Indeed, to the extent that the Germans always regarded the euro as a less safe store of value than the near-sacred Deutschmark, and would never have given up the latter if they had been consulted in a referendum, it would hardly be a surprise if the domestic pressure grew to leave the euro and return to their national currency.

The political establishment in Berlin would never countenance such a volte-face although it would probably be the healthiest outcome both for Germany and the rest of Europe: the euro-denominated debts of countries such as Spain, Portugal and Italy would be devalued, making outright default less likely. Meanwhile, Germany would still be a formidably successful exporter even with a much stronger currency, as it had been before the euro was imposed – against the dire warnings of the Bundesbank, whose economists always understood that a monetary union without a single federal European government was doomed to break up.

Meanwhile today’s Open Europe‘s press summary includes this from Greece’s training-wheels Chávez:

Alexis Tsipras, leader of the radical left-wing SYRIZA party which currently leads on 28% in the polls, warned in Paris yesterday that German Chancellor Angela Merkel “must understand that she is an equal partner with others in a eurozone which has no tenants and owners. She should not allow herself to behave as if we are a protectorate”.

Well, it’s  hard for her to do otherwise when Greece (and others) persist in being dependents. Tsiparas  is not, I suspect, much of a democrat (and Merkel does not score too highly on that count either), but does he really think that the German Chancellor owes no obligation to protect the interests of her own taxpayers? Answer: he cannot. But the game this tough demagogue is playing is for a Greek audience, and everyone else can go hang.


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