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Once again, Europe has a country at its centre that is too big for its neighbours. Merely by keeping on its best behaviour, Germany has managed to reawaken the historic "German problem". It has succeeded its way into a crisis. Ever since Greece's finances became a matter of public concern just over two years ago, Germany has been regaining its status as the leading power in Europe. It subjected itself almost a decade ago to a painful reform of its welfare state and a freeze in real wages that has made it as competitive an exporter as any country in the world, including China. 

Now Germany's economy is better balanced than those of other European countries, its reputation for honest accounting stands higher, and it has kept its triple-A credit rating while France, Austria and others have been downgraded.

Nearly everyone agrees that Germany must save the Mediterranean economies. The Germans propose to do so by lecturing them — posting fiscal commissars in spendthrift ministries, suggesting ways to slash government waste and subjecting the slackers to penalties from the European Court of Justice if they don't comply. The southern European countries see it differently. They propose that Germany solve their problems by paying them.

But German taxpayers are keen to know exactly how much it is going to cost them to bail out Greece and the poorer southern European countries with which Germany is trapped in a common currency. Chancellor Angela Merkel and her ministers say the cost will be zero — Germany is just offering "guarantees", that's all. 

But a brewing populist opposition believes otherwise. Television talk-show hosts warn viewers that the cost will be high. The country's largest circulation tabloid, Bild, greeted Greece's new premier Lucas Papademos last November with the headline, "Will a Euro-Trickster Become Greece's New Prime Minister?" and demanded that German politicians "Bring Our GOLD Back to Germany!" In books with titles like Stop the Euro-Disaster!, The Crash Is Coming, Save Our Money! and The Illegality of the Euro-Rescue, pop economists argue that Germans are wrecking their own country to keep their Mediterranean neighbours in a dolce vita of Porsches, strike pay and retirement at 57. The details of the €206 billion Greek bond "swap" indicate the populists are getting the better of the argument.

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Anonymous
April 13th, 2012
2:04 PM
"Two solutions are possible. You can adjust the currency to match the government, scrapping the euro and reintroducing the old national currencies. Or you can adjust the government to match the currency, transforming the European Central Bank into a lender of last resort (like the US Fed) and giving Brussels budget-making power over the whole continent." No prize for guessing which option the Eurocrats will opt for.

Anonymous
April 8th, 2012
4:04 PM
"more ex nazis than in the west"?? Can this claim be substantiated? fear of the Russian invaders sent most of them scurrying to Schleswig Holstein and in the early post war years the Russians found far more Nazis than did the Americans. They and the British were more concerned to rebuild the country than revenge.

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