The world to teach Germans to…un-German

José Manuel Barroso, Angela Merkel, German Federal Chancellor, and Jean-Claude Trichet, former President of the European Central Bank (ECB), from behind (from left to right)

Italians and Greeks are trained tax dodgers for millennia now, while Spanish banks lately discovered how to usurp their depositors’ money. No wonder then why the three Mediterranean nations found it difficult to endure the Teutonic straight euro money jacket. As for the Portuguese and the Irish they both followed those Med attitudes and the five countries have now arrived at the conclusion that they cannot cope with the German miser way of living and doing business.

What is new however has to do with what the rest of the world thinks is right for Europe; the Med relaxed attitude or the German austere ideology? It seems that the International Monetary Fund, representing the other global economic powers like USA, China, Russia, India and Brazil have now concluded that the European South is right! Christine Lagarde, the head of IMF, said it plainly this week in Tokyo, during the annual general assembly of the Fund: “Greece must be given two more years to apply its austerity programme”.

This was divine music for the Greek ears. Lagarde however is not making a gift to Athens but rather to Washington and Beijing. The idea is that the IMF and the White House are now definitively convinced that Eurozone’s obstinacy for austerity is holding back global growth. And the culpable party is obviously Germany, not allowing the European Central Bank to settle the over-indebtedness problem of Greece, by cutting down the value of the country’s debt obligations. Berlin insists that the ECB should not help governments, unlike what all the other major central banks do.

The truth is however that the part of the Greek debt ECB holds, has been acquired in the secondary market at discount prices around 50% to 60% of its nominal value (below par). The ECB though demands that Athens pays the maturing Greek bonds at 100% (par value), thus making huge profits on the corps of the passing away Greek economy. Those profits are then passed to its major shareholders, with the largest being Germany. If this is not looting then words have lost their meaning. Coming to Madrid, Germany again is playing hard ball and retreats from what the European Summit of June 2012 has decided, that is, to support the Spanish ailing banks with up to € 100 billion.

This money could come directly from the European Stability Mechanism, not counting as Spanish state debt. Berlin and its followers in The Hague and Helsinki are now saying that the decision of June refers to…future debts not the existing ones, as if everybody else are morons…This is a position which cannot be held for long. The American presidential election does not play any role here. Obama or Romney will tell the Germans that the US and the world are asking Berlin to come down to earth and abandon once and for all the German tradition of believing in wrong ideas, an attitude detrimental to everybody, even to Germans themselves.

Two world wars stand witnesses to that. In such an environment Germany will soon accept to decisively help its Eurozone partners in the Mediterranean, along with Portugal and Ireland, by relaxing the imposed austerity, with the euro slightly receding vis-à-vis the dollar. It is the only way for the global economy to revitalise itself and enter a new virtuous cycle of growth engulfing the developed and the developing countries.