Ms. Merkel certainly should be aware of 20th Century German history. It is ironic that Germany, of all governments, would be demanding debt repayment. Greek debt is a pittance compared to Germany’s forgiven debt following The Great War and WWII.
Even Great Britain and France have not always honored their debts. But, Greece is a smaller country, of course. It isn’t yet time for the small and the weak to inherit the Earth.
Here in the US, Americans are mostly confused about the potential ramifications of what is cutely termed, Grexit, to the extent they care at all. Surely, it’s a European problem. We’re the good old US of A. It doesn’t concern us at all. WRONG answer.
First, let’s delineate the situation as it developed in Greece. Then we’ll look at what that portends for the US.
Greek demographics have changed. The older, more conservative voters were dying off. The younger generation leans more to the left. That’s the trend in essentially all democratic countries. Some are changing faster, some more slowly.
The previous government, wanting to remain in power, was successful, for a time, in buying the vote. They went too far. Pensions and other benefits became outlandish, by almost any measure. Then came the bill. They call it belt-tightening. You’ve likely also heard it called unemployment, recession and such. This May unemployment stood at 27.6%. People had less money. Businesses lost business. More unemployment.
The real problem now, as it has been here and in many other countries since 2008, is too little money flowing through the economy. What is the remedy demanded by Germany and the Eurozone leadership? Cut back even more. Sure. That oughta work. As Paul Krugman said, one is reminded of the doctors of yore draining the blood out of their patients.
Here in the US, we’ve been hearing the same song. Our situation wasn’t as critical and the “debt reduction” has been less severe. The conservatives, in their childish perception of the world, think government runs the same way as a business or a family. You have debt. You reduce spending.
News Flash: Government is not a business or a family.
If your family lost one of its earners, would you have another earner in the family quit their job? Wouldn’t that reduce the family income?
The big banks are sitting on more than $2 trillion. They would rather borrow money from the Fed and use it to buy government-backed bonds than lend their stash, at least here in the US. The big corporations also are sitting on more than $2 trillion. Neither are putting much money into the economy. Remember? The real problem with the economy is not enough money flowing through it. They’re no help.
You and I don’t have enough money to juice the economy unless you’ve been holding out on me. Hmmm. Who else is there? Oh, I know. The government could prime the pump. But, the government is in debt, you say?
Well (to quote the one primarily responsible – one word is the only Reagan imitation I have mastered), the government is supposed to build up a reserve when times are flush and go into debt when the economy is in the toilet. Our problem is that the “fiscal conservatives,” St. Ronnie, Pappy and Dumb Dumb partied on our credit card instead of preparing for the inevitable rainy day.
Our economy hasn’t fully recovered from The Great Recession, despite Wall Street’s gas-filled numbers. We really need Europe to be stable. Putin’s antics and the droves of immigrants from Africa are unsettling. The possibility of a collapse of the Euro has already begun to affect markets around the world. No one is certain of the ramifications of Greece leaving or being booted from the Eurozone.
These matters have brought on instability, which has driven down the Euro. So? That makes our exports more expensive. It leaves us less competitive.
My impression is that most Germans have grown beyond the historic disdain of their fellow Europeans. Perhaps being in power too long has separated Ms. Merkel from the general population in that regard. She sees Greece as an easy target; a useful object lesson. It will be a lesson, but not the one she expects.
She seems to have no qualms about forcing Greece out of the Eurozone. That entity was designed for entry only; no exit. It was a policy Abraham Lincoln would find agreeable. Once there is an exit, the next one has a precedent. That road is fraught with risks, unknown risks, for Europe and the US.
The “solutions” enforced by Merkel and her fellow “experts” have caused greater unemployment than the US experienced at the worst of The Great Depression, decimated Greece’s banking system [ed: This is the first time I ever felt sorry for banks.] and exacerbated the foreign debt crisis itself. The Merkel and her band of poseurs, laughingly called finance ministers need to be replaced with people not looking through the prism of a set of inane ideological decrees.
Europeans want economic union. We have it in the US. Is it perfect? No. Is everyone equal? No. We have a bunch of parasitic red states taking in far more from the Federal government than they pay out. A previous article shines some light on the subject. All states are not equal. The Eurozone could go that route if they could get past the hubris of Merkel and her fellow “fiscal conservatives.”
One other possible solution is available. We say it is important to the US that Greece find some way out of this pickle. The Greek debt is less than our leaders were willing to invest in Iraq and Afghanistan. The US could just fork over the funds. Perhaps it’s time for another Truman Doctrine. The results might possibly be more pleasant than the Bush wars.
While the demographics in Greece and the rest of Europe have shifted significantly to the left, so it has in the US. We’re lagging a bit, but it is partially hidden here due to gerrymandering and the Supreme Court. The endgame is in sight, but it’s too early to celebrate just yet.