From Greece to Germany. When will we focus on the elephant in the room ?

We are living in interesting times. The last few weeks were especially fascinating to watch. We are witnessing history in the making

First all eyes were on Greece. The narrative was all about the Greeks bringing their dire plight all upon themselves. They – we were told rightly or wrongly – are lazy and receive their pensions at 55 but refuse to pay taxes for their European first world education, health and social systems. All this being paid for by cheap loans from their European partners without any possibility to ever pay them back.
The culprit and disease were identified. The bitter pill austerity was administered over the last few years. Unfortunately the problem was not solved but made worse. The economy contracted by 25%. Unemployment especially for the young skyrocketed. Many were forced to leave their homeland to seek a future abroad. Many desperate victims of the situation killed themselves. Others died preventable death because of the collapsing health service. Even the IMF had to admit that their policies had made the situation worse not better.


Blunder: The IMF has admitted mishandling the Greek debt crisis, leading to violent anti-austerity protests like this demonstration in Athens last November

Then just a couple of weeks ago the focus began to shift. The EU leaders went into one of their usual crisis- stop the clock at midnight- deadline- meetings to sort out Greece. Even if the Germans were not the only hardliners in the Euro zone it became very clear that chancellor Angela Merkel and finance minister Wolfgang Schäuble were leading the charge.
What the Greeks had not been able to do before by shining the torch on Nazi Germany’s occupation and atrocities in Greece during WWII and the fact the Greece was among the nations giving Germany debt relief in 1953


the Germans with brutal efficiency managed over night. The focus shifted to Germany.

The New York Times under the headline “Germany Risks Its Reputation With Idea of Greece Exiting Eurozone” reported:
One could argue, as many have, about the correctness of the German prescription of austerity in a time of recession. But the brutality of the negotiations over Greece in Brussels has damaged Germany’s reputation inside the European Union, said François Heisbourg, a French analyst.
“I think the Germans have crossed a line,” he said, “and it will be very difficult for them to walk it back.”
Jürgen Habermas, a pro-European German intellectual, said that Ms. Merkel and her coalition government, including the center-left Social Democratic Party, “have gambled away in one night all the political capital that a better Germany had accumulated in half a century.

And it came thick and fast. In the UK Guardian under the headline “The euro ‘family’ has shown it is capable of real cruelty” we could read “This “bailout”, which will be sold as being a cruel-to-be-kind deal is nothing of the sort. It is simply being cruel to be cruel.”
The Huffington Post headline “Deutschland Deathgrip” lead to a Washington Post article with the following image:

Even the German News Magazine Spiegel Online called the terms imposed on Greece “The Catalogue of Cruelty”.

And the Germans don’t understand what hit them. They feel the misunderstood victims. Everyone especially the English speaking world is picking on them. And they don’t like to be reminded of the past if it doesn’t fit their picture. With the European Union project the Germans are led to believe that they are just the paymasters for other mostly southern European countries’ frivolities. That they as the biggest economic power are also the greatest beneficiaries from the market of 500 million people is often forgotten. They just visit Spain and see a perfect roading infrastructure. They visit Lecce a beautiful restored Baroque town in Southern Italy. And they see the signs “Financed with the help of the EU” and feel that they personally paid for it.
If you remind them of the debt conference in London 1953, which made the German “Wirtschaftswunder” (economic miracle) possible they either weren’t told or don’t want to know. Unlike the earlier Holocaust they accepted as drummed into them and accordingly still slip Israel little presents like nuclear capable submarines no mercy is shown to Greece, which years later had forgiven Germany’s debt.

Another problem is that many if not a majority of Germans see the problem in a moral dimension. It has something to do with the fact that the German language has the same word for debt and guilt. Debt has to be paid. Otherwise rules would be broken, which is another anathema to most Germans. Again conveniently forgetting that Germany also broke European rules even if not with the disastrous consequences as Greece.

It was interesting for me that some of my ex-German friends here even after more than 30 years in New Zealand were feeling the same as some friends in Germany. One wrote that Greece needs a Hercules to clean out the pigsty. Germany should be thanked for showing the wayward child the right (German) way of order and paying taxes.

Economic historian Jacob Soll a few weeks ago attended a conference on Greek sovereign debt in Munich. He describes his experience in the New York Times. After long scholarly discussions the mood changed.
When the German economists spoke at the final session, a completely different tone took over the room. Within the economic theories and numbers came a moral message: The Germans were honest dupes and the Greeks corrupt, unreliable and incompetent. Both parties were reduced to caricatures of themselves. We’ve heard this story throughout the negotiations, but in that room, it was clear how much resentment shapes the views of German economists.
When I noted that no matter how badly the Greeks had handled their economy, German demands and the possible chaos of a Grexit risked political populism, unrest and social misery, they were unmoved. Debtors who default, they explained, would simply have to suffer, no matter how rough and even unfair the terms of the loans. There were those who handled their economies well, and took their suffering silently, like Finland and Latvia, they said. In contrast, a country like Greece, where many people don’t pay their taxes, did not seem to merit empathy.

And here we come to the crux of the matter. The issue is not about lazy Greeks and angry Germans. It is not even about design faults of the Euro or the European Union. All these are sideshows. Nobody talks about the elephant in the room.

The elephant is the neoliberal capitalist system dominated by the finance industry. A system, which is built on debt. Private banks legally print money out of thin air to lend to governments for the taxpayer to pay interest. A system, which needs ever increasing debt to “grow” the economy, which in reality means grow the interest burden on the rest of us for the benefit of the private banks. A system, which inherently staggers from crisis to crisis. An economic dogma, which does not allow for empathy with the suffering of real people. Money over people. A dogma, which hates democracy. Remember the outrage of the European power brokers and international institutions, when Greece dared to have a referendum on austerity.


The good thing is that the Greek suffering and struggle is becoming more and more visible beamed into our living rooms for everybody to see. I watched recent German TV reports from Greece. It reminds me of the Vietnam war. There TV footage of the reality of that war were broadcast into US living rooms and brought an end to it. The people couldn’t stomach it anymore.

I am not to hopeful that “The end of capitalism has begun” as the headline of a recent article in the UK Guardian suggests.

However looking at the misery not only in Greece but all around us even in little New Zealand I am hopeful that we at last will start to focus on the elephant in the room.

by Dr. Hans B. Grueber

PS: Recommended reading my previous blog about the Greek tragedy

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