Sunday, July 28, 2013

A little Germanic craziness for the day

It takes real imagination to defend German Chancellor Angela Merkel's decision-making on the euro crisis, which has probably doomed the euro to disintegrating and may wind up finishing off the European Union, too.

But Foreign Affairs editor Cameron Abadi makes the attempt in Germany Loves Merkel's No-Drama Style Bloomberg Businessweek 07/25/2013. It even features a photo showing demonstrators in front of the Brandenburg Gate carrying a banner saying, "Angie, We Love You!"

Are you flipping kidding me?

Well, each to their own, I guess. And Germany's One Percent has some reason to love Angie, since she has been so attentive to their desires.

Here's what Abadi imagines:

[C]riticizing Merkel for her lack of vision misses the point. She's insisted that the governments of southern Europe impose austerity as a condition of receiving German aid. This isn't just a defense of Germany’s interests or a stubborn insistence on enforcing moral hazard. It's also been her method for incrementally educating Germans about their stake in the survival of the euro system. Over the past several years, Merkel has spoken out against the following: intervention by the European Central Bank, a permanent bailout mechanism, centralized economic governance for the EU, and a banking union. In each case, she ultimately backtracked and lent German support to measures aimed at preventing the collapse of Europe’s weaker economies. Last summer, when ECB President Mario Draghi vowed to do "whatever it takes" to preserve the common currency, he was openly opposed by the Bundesbank—perhaps the most popular political institution in Germany. But Merkel gave Draghi her backing as soon as panicking bond markets forced her hand. [my emphasis]
This is a case of gilding the lily. Or maybe gilding the dead flowers.

In a memorable understatement, he follows immediately:

Merkel's leadership-from-behind has at times raised the costs of the crisis. In early 2010 she publicly agreed to make EU money available to Greece without clarifying the extent of Germany’s contribution, triggering a bond market panic that spread to Ireland and beyond. Two years later she delayed determining the terms of a Greek bailout ahead of an important state election, which caused the size of the eventual bailout to grow.
Yeah, she "has at times raised the costs of the crisis." As in turning what should have been a localized debt crisis in Greece in 2009 from an easily-handled problem to a disaster of historic proportions.

Other than that, Mrs. Lincoln, how did you like the play?

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