The current Stratfor article by George Friedman discusses the entanglement of Germany and Greece in the current EU financial crisis.
He points out that Greece's debt problem is partly Germany's fault. The German economy rests on exports to the Euro Zone, so German's have had a loose credit policy which has abetted in creating the problem.
Greece has two options, sacrificing its sovereignty as a price for financial aide or defaulting on their debt. Neither choice is a good one, but Greek politics might make default the more palatable option.
The German position is likewise complex, with the reality of their domestic politics as well as the rest of Europe's understandable concern, particularly in light of Germany's performance in the 20th Century, about Germany exerting so much influence in another country's affairs as being worrisome. As a result Germany has a thicket of problems to try to work its way through as well.
It is an interesting article. Below is an excerpt of the start of it, but I recommend you follow the link after the excerpt and read the entire article.
As for the article's Hot Stratfor Babe, of course Brünnhilde was the obvious choice. Not only because she is Teutonic, although that certainly helped her case, but primarily because she is so often associated with the American saying, "it ain't over 'til the fat lady sings."
Although the origin of the saying is unclear, the most common explanation for it is that the fat lady singing refers to the 10 minute aria sung by Brünnhilde that ends the Götterdämmerung cycle of operas by Richard Wagner. There are other explanations, the most convincing being it is an old Southern expression, "Church ain’t out till the fat lady sings." They are chronicled in this Phrase Finder post if you're interested in pursuing the matter further.
Whatever its origin, regarding the EU financial crisis it looks like it is getting closer and closer to the time that the fat lady finally sings. I do not look forward to the radiating shock wave from that aria.
Germany's Role in Europe and the European Debt CrisisBy George Friedman, January 31, 2012
The German government proposed last week that a European commissioner be appointed to supplant the Greek government. While phrasing the German proposal this way might seem extreme, it is not unreasonable. Under the German proposal, this commissioner would hold power over the Greek national budget and taxation. Since the European Central Bank already controls the Greek currency, the euro, this would effectively transfer control of the Greek government to the European Union, since whoever controls a country's government expenditures, tax rates and monetary policy effectively controls that country. The German proposal therefore would suspend Greek sovereignty and the democratic process as the price of financial aid to Greece.
Though the European Commission rejected the proposal, the concept is far from dead, as it flows directly from the logic of the situation. The Greeks are in the midst of a financial crisis that has made Greece unable to repay money Athens borrowed. Their options are to default on the debt or to negotiate a settlement with their creditors. The International Monetary Fund (IMF) and European Union are managing these negotiations.
Any settlement will have three parts. The first is an agreement by creditors to forego repayment on part of the debt. The second is financial help from the IMF and the European Union to help pay back the remaining debt. The third is an agreement by the Greek government to curtail government spending and increase taxes so that it can avoid future sovereign debt crises and repay at least part of the debt.
Bankruptcy and the Nation State
The Germans don't trust the Greeks to keep any bargain, which is not unreasonable given that the Greeks haven't been willing to enforce past agreements. Given this lack of trust, Germany proposed suspending Greek sovereignty by transferring it to a European receiver. This would be a fairly normal process if Greece were a corporation or an individual. In such cases, someone is appointed after bankruptcy or debt restructuring to ensure that a corporation or individual will behave prudently in the future.
A nation state is different. It rests on two assumptions. The first is that the nation represents a uniquely legitimate community whose members share a range of interests and values. The second is that the state arises in some way from the popular will and that only that popular will has the right to determine the state's actions. There is no question that for Europe, the principle of national self-determination is a fundamental moral value. There is no question that Greece is a nation and that its government, according to this principle, is representative of and responsible to the Greek people.
The Germans thus are proposing that Greece, a sovereign country, transfer its right to national self-determination to an overseer. The Germans argue that given the failure of the Greek state, and by extension the Greek public, creditors have the power and moral right to suspend the principle of national self-determination. Given that this argument is being made in Europe, this is a profoundly radical concept. It is important to understand how we got here.
Germany's Part in the Debt Crisis
There were two causes. The first was that Greek democracy, like many democracies, demands benefits for the people from the state, and politicians wishing to be elected must grant these benefits. There is accordingly an inherent pressure on the system to spend excessively. The second cause relates to Germany's status as the world's second-largest exporter. About 40 percent of German gross domestic product comes from exports, much of them to the European Union. For all their discussion of fiscal prudence and care, the Germans have an interest in facilitating consumption and demand for their exports across Europe. Without these exports, Germany would plunge into depression.
Therefore, the Germans have used the institutions and practices of the European Union to maintain demand for their products. Through the currency union, Germany has enabled other eurozone states to access credit at rates their economies didn't merit in their own right. In this sense, Germany encouraged demand for its exports by facilitating irresponsible lending practices across Europe. The degree to which German actions encouraged such imprudent practices -- since German industrial production vastly outstrips its domestic market, making sustained consumption in markets outside Germany critical to German economic prosperity -- is not fully realized.
Read the rest of Germany's Role in Europe and the European Debt Crisis
It Ain’t Over Till . . . Oh Wait, There’s the Fat Lady
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