Richard Wolff: Déjà Vu: Germany Tightens Its Economic Power Over Europe

[marmar]

Déjà Vu: Germany Tightens Its Economic Power Over Europe

Monday, 17 August 2015 00:00
By Richard D. Wolff, Truthout | News Analysis


Germany's leaders herded their European counterparts into imposing harsh austerity on Greece. It was the price, they insisted, that Greece had to pay to receive bailout credits from the European Union, European Central Bank and International Monetary Fund (IMF). The Europeans required those bailout credits to be used mostly to pay back loans the Greek government had gotten earlier from private banks (chiefly German, French and Greek). Those credits could not be used to get Greece out of the 2008 crash that afflicted all of Europe.

Those private banks had gladly and profitably pushed too many loans onto the Athens government for many years. When the 2008 global crash brought forward the moment when the Greek government could no longer carry its bloated, excess private debts, default loomed. Had that happened, those private banks would have required second bailouts (their first occurred in 2008-2009) from their governments. But the speed and generosity of those first bailouts had enraged much public opinion in France, Germany and Greece. A second bailout, required if Greece had defaulted, would have finished those countries' leaders' political careers. Cleverly, the leaders arranged for those institutions to lend to Greece to pay off its private creditors: no need then for second bailouts.

To cover this maneuver with "public relations" distractions, German Chancellor Angela Merkel and others promised to require Greece to undergo a tough austerity treatment, portrayed as economic pain and punishment that Greeks brought on themselves. It was necessary "medicine" that would soon deliver economic recovery. All leaders everywhere promised and still promise recovery to austerity's victims. In fact, since 2010, austerity brought Greece further economic decline, not recovery. Indeed, recoveries proved elusive or painfully slow for most Europeans as they struggled with austerities of varying intensities.

Germany pushed hardest for the harshest Greek austerity. That too was a maneuver for domestic political advantage. Merkel loudly depicted herself as protecting Germans from higher taxes (to pay Germany's share of any future institutions' bailouts of European countries like Greece that did not repay their debts). Merkel and her finance chief rigidly refused to relieve Greece of its debts (even though the IMF and countless experts said openly that Greece's debts were simply "unsustainable" and could never be paid). Merkel's refusal meant that Greeks' tax payments would go not for roads, schools and hospitals, nor to rebuild a crisis-shattered economy, nor to pay and pension Greek public workers. Greeks' taxes must instead be used to service Greece's debts to the institutions for limitless years into the future. Merkel's posturing served her domestic political purposes, but at a huge cost for Europe. ..............(more)

http://www.truth-out.org/news/item/32380-deja-vu-germany-tightens-its-economic-power-over-europe

[Blue_Tires]

1. Last I checked...

Nobody put a gun to Greece's head and made them accept such a supposedly one-sided deal...The Greeks can either play the hand they were dealt and make the best of it, or they can get up and walk away from the table...

Not sure what Wolff is trying to say here aside from "How dare those Germans reap the reward of long-term prudent, fiscally conservative economic policy!"

[SoLeftIAmRight]

2. do you only give two choices to everyone?

seems just a bit restrictive

[Blue_Tires]

3. I'm just tired of seeing "EVIL Germany" stories like the whole thing is their fault...

And believe it or not, there *are* only two plausible options here -- Greece can stay in the Eurozone and continue to negotiate the terms of the latest bailout, or they can break off and go on their own...

[SoLeftIAmRight]

4. i think that the poeple who will suffer the most

were not at fault