Michael Pettis, a Spanish international economist currently working in China, accuses thrifty Germans of forcing Southern European countries like Greece and Spain, to get indebted over their capacity of ever repaying their debts. In fact, he says that Germany has enslaved these peoples by foul play. He blogs:
As I see it, domestic German policies, perhaps aimed at absorbing East German unemployment, forced a structural trade surplus. The strong euro, along with the automatic recycling of Germany’s large trade surplus within Europe, ensured the corresponding trade deficits in the rest of Europe – unless Europeans were willing to enact policies that raised unemployment in order to counter the deficits. As long as the ECB refused to raise interest rates, southern Europe had to accept asset bubbles and rapidly rising debt-fueled consumption.I have heard this argument. President Correa offered to pay 30 cents on each dollar of Ecuador's sovereign debt because the debt was "immoral" and "forced on poor helpless Ecuador by powerful foreign banks". In the 19th Century, British banks were Latin America's favorite oppressors. Now the same argument is being recycled by Pettis. And many others.
This couldn’t go on forever, or even for very long. Now southern Europe is paying the inevitable price, and of course the moralists are accusing the south of being shiftless and lazy, confusing the automatic balancing mechanisms in the balance of payments with moral weakness.
15 comments:
Whether there is any moral dimension to this or not ( I agree w/ you that there is), Pettis agrees that the situation cannot go on for very long - that's the important thing. Fixing a problem is always more important than looking backward and pointing fingers of blame. Since the problem was caused by corralling dissimilar economies (whether you call the Germans "thrifty and hard working" or "export driven" makes no difference) to the same currency, the solution is to kick Germany out of the common currency and into having its own mark again (the way Brer Rabbit gets thrown into the briar patch). Oh, please you not lazy, no moral dimension southerners, I am causing an asset bubble in your economy - please throw me out to solve the problem.
K
In the barrio we had a saying: "Quien se acuesta con pendejos, se levanta cagado". It can be understood in several ways, but the interpretation I am applying now is that "If you go to bed with un unworthy person, you wake up smeared with excrement". In this case, the Germans went to bed with the Greeks and the Spaniards, and now find themselves swimming in the latrine. It is like a marriage not made in heaven: it will be painful if they divorce and it will be painful if they resign themselves to their bad marriage.
Same old story: the elites of the EU bought off the mob (disproportionately represented in Greece, Spain, etc.) to side with them in their power struggle by expropriating wealth. The only thing that separates this from the Soviet Union in the 20s and 30s is that the wealth was expropriated from the bourgeoisie's future pockets.
The Latin version is:
Qui cum canibus concumbunt cum pulicibus surgent.
"If you lie down with dogs, you get up with fleas."
But the question remains why the Germans chose to sleep with these particular dogs? What was in it for them? Partly it was economic - a lot of the EU money that was spent in the south ended up back in Germany, whether it was for contracts with Siemans to build high speed rail or in the form of BMW sedans (still a bad deal for the German taxpayers and bondholders who are paying for this stuff, but not for the industrialists). Partly it was in order to help return Germany to the community of nations. Not only did Germany crave international acceptance but I have read that France made the euro an explicit condition of agreeing to German reunification. But now all moral debts are repaid and Germany should get the hell out of the euro currency whorehouse. The whole bargain between the German people and their postwar government was "we'll give you a stable currency and you'll give up on all that marching around with flags and Blut und Eisen crap." If the government doesn't keep the stable currency promise maybe the German lads thoughts will once more turn to Lebensraum.
K
K,
have you SEEN the German lads lately? The only thing those metrosexuals could occupy is a room in mom and dad's house and a pair of tight jeans.
B
Are you serious?
I was stationed in Germany when I was younger. I would frequently get drunk, irritated with the rude metrosexuals around me, and try to start fights. Not once did I succeed. My colleagues, who were similarly asshats, had the same experience.
Using Ecuador as an example of this type of stupidity is perfect. The parent (Spain) is showing how it is clearly responsible for the culture of failure in Latin America. Your friends in Argentina were right when they said that the Spanish colonization of the New World was a disaster.
Like father, like son.
I take your point B, but as I've said before, things can change - the Japanese went from insane kamikaze bombers to concerning themselves only with the making of transistor radios and such virtually overnight. All the good citizens of E. German forgot about that whole Communism thing in about 5 minutes. Things could shift in the other direction just as rapidly.
K
It is the petrodollar story all over again. Huge surpluses have to be parked somewhere and few are the Puritans interested in the measly US T-Bond rates, made worse by the depreciating dollar. Hence some sucker nations have to be brought into the system, for as Walt Wriston sagely pointed out "countries don't go bust.." Given that, it is then a matter of managing the virtually inelastic demand for loans, by postponing the day of reckoning say for another ten or fifteen years. Seven years of fat followed by seven years of lean, give or take a few years has always been the pattern of human development. Boom-bust cycles are the agency through which said development takes place. When James Baker forced the Japanese to revalue the yen in 1985, the resulting appreciation of the yen fueled a tremendous boom, which in turn was largely responsible for the industrialisation of SE Asia and its initial phase in China. The only thing to be regretted is that I should have gotten one of those banking sinecures, instead of struggling as a lowly engineer.
K,
it's easy to make a paraplegic from an Olympic athlete, but impossible to do the reverse. If you think that those Japanese are capable of putting down their robot sex dolls, octopus rape porn and designer shopping bags to go for some old-fashioned bayonnetin' in Rabaul, I've got a bridge for sale.
Is it the bridge over the River Kwai?
By the way, the author of that book was French and he modeled his collaborationist officers on real French officers he knew (and the characters were made into Brits in the book/movie - nobody wants to read about the French army's performance in WWII). The French make much better enemy collaborators than the British. Until I read this, I always thought the movie made little sense - I could not see British officers behaving in the way they did in the movie. If you see them as French officers, the movie makes perfect sense.
K
K,
oh, perfect example! Have the French shown signs of recovery from their national descent into faggotry?
The French military is more capable than you think. They tend to be poor led and so end up losing but at the operational level the troops are not the nancy boys that you think they are and they are quite well equipped. For example, France is one of the few countries that has a nuclear aircraft carrier. It has some unique touches - I once saw a cutaway model of it in a French museum and one of its features is a large meat locker for hanging sides of boeuf. Someone had carefully built miniatures of the sides of beef on their hooks to put in the model. I'm sure that French troops are better fed than Americans.
K
In finance circles the wine says that the best food is served in Swiss prisons.
In the Foreign Legion, according to old legionnaires, the food was horrible. Only the wine was drinkable.
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