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Germany, the European Union member with the largest and strongest economy, should get off their high horse and support Greece, not the International Monetary Fund (IMF) -- which to a large extent is the United States.
Greece is on the brink of disaster and for some reason the German government, following the sentiments of the man on the street, is willing to let the chips fall where they may. They do not seem to be able to grasp that the EU ship can only sail in one direction at a time and that half a ship will not sail at all.
The German economy will most certainly feel the effects of a sinking euro and the impact will be far greater if the Union is threatened as a result. This is so obvious and has been discussed at the highest levels all around the world, in every major financial center, that it makes me think that there is something else at work here.
Could it be that Germany wants to see the value of the euro fall to get a competitive advantage on its balance of trade. Because it has the largest economy, perhaps Germany thinks it might be helped the most. Perhaps the desire to increase exports is the 800-pound gorilla in the room, but it has been dressed up in pompous blabbering about Greece's poor economic policies to deflect the real agenda.
Germany has been bailed out of a mess more than once, and most economies have their trials and tribulations. Germany should help the Greeks by supporting lower interest rates on their bonds and not cast them off the EU ship. If they continue to look to the IMF to support a full-fledged member of the European Union, then I think we would be justified in reducing our contributions to the IMF to equal that of Germany's. Either that or the IMF should start subsidizing loans to California, Nevada and Michigan.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money.
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Reader Comments (Page 1 of 1)
4-10-2010 @ 4:29PM
Dan Asta said...
What you write makes a lot of sense to me, and I think this has been the upshot of a lot of articles critical of Germany. The Greeks lied, yes we know that, but when you look at the extent of the lie (revision of predicted annual deficit to GDP from 6% to 12.7%) we're talking about $15 billion. Not that much. Some want to look at total Greek debt of 115% debt to GDP, but if one looks at Eurostat, they will noticed that Greece has been reporting 90% debt to GDP for a decade, and 100% as soon as 2005, so 15% extra after a bad recession is not a total shock.
And yes, German state-owned banks received bail out money from TARP through AIG, and yes of course, there was the Marshall Plan, which makes me wonder too what Germany is up to.