About Us
22 December 2011
Unbelievable! It's been two weeks and Europe is still burbling about our summit "plan" for future fiscal integration. I guess this is what they mean by Stockholm Syndrome. I thought my fellow leaders understood they were just playing along for my domestic audience. They actually are taking the plan seriously! The British have practically torn themselves up over it. The Czechs are beside themselves at being asked to ratify a "blank piece of paper." Shhh!
I guess this is the downside of being Europe's last solvent big economy. Dependency breeds infantilism! I went to the summit looking for a dog-and-pony exercise to meet my domestic needs. I thought everybody understood that.
My public has no desire to "solve" the crisis right now so I presented them with a purely figurative redesign of European governance as if to say, "Nothing like this will be permitted to happen again." It was just a diversion, a show.
Ha, ha—the situation would be funny if it weren't giving me a headache. The German economy is still ticking over! Employment is strong. Exports are strong. My people see the mess to our south as somebody else's problem.
The markets certainly weren't fooled. It's going to take something seismic to get me off the dime. In the meantime, Mario Draghi is holding the markets together with twitches of his eyebrows. He's a great central banker. He stopped the immediate crisis by opening the European Central Bank's funding windows to the commercial banks, hoping they'll recycle ECB cash into the bonds of Spain, Italy and France. He's buying time—that's all.
When will my voters be ready to act? I have no idea but I'll know it when I see it. What will my action be? No idea! The political room to maneuver is what I need first—and then I'll . . . maneuver.
I suppose it's not surprising that Washington sees everything through the prism of America's political calendar. But they think I should too. Tim Geithner comes here once a month and bends the ear of every junior assistant policy maker in my government about the importance of avoiding a financial meltdown that might interfere with Obama's re-election. Who does he take me for? Obama girl?
Yes, it's important to avoid a meltdown, but it's also important not to take the heat off Italy, Spain and the rest to overhaul their competitiveness. Those who don't know our southern friends don't appreciate how truly feckless their politicians are. Did you see Chirac was just convicted? Nobody is shocked he's a crook—they're shocked anybody in France cares.
Plus, I have to listen to professors wishing away the political problem while propounding their Keynesian nostrums. They say we should just reflate our way out of the crisis and worry about fiscal discipline tomorrow. That might work—if I could invade my neighbors to stop them from ditching their reform efforts the moment the pressure is off.
Germany is a democracy too, a virtuous one. You don't want to see what happens when my voters decide they were gypped by monetary union. Serious voices already are demanding a return to the D-Mark. Well, it may come to that. If we "Europeans" are to survive the crisis together, it will be on terms my voters can accept.
Mario can't restore countries to solvency by printing money. When the crunch comes, a few of our putative "peers" are going to have to accept restructuring of their debts—i.e., default (never mind Europe's reinstated "no default" policy). My voters will reach into their pockets to save Germany's banks, repository of our savings, backbone of our economy. They won't reach into their pockets so sovereign deadbeats can avoid the ignominy of default or politicians the unpleasant duty of sending their country's middle-aged retirees back into the job market.
Look, the euro exists. It's here. The only way to make it work is to reconcile it with the fact that we are, and will remain, sovereign independent countries. We all take turns whacking the Brits but it's a self-delusional lie to pretend any of us are prepared to cede prerogatives of self-governance to foreign bureaucrats. C'est absurd! The more solvent the country, the less willing to tie its fiscal fate to its neighbors. We must stop pretending.
Eurobonds? This would be like prescribing cigarettes to cure cancer. If introducing the euro tempted our neighbors into reckless debts, how much more so when they can pass along the IOUs to Brussels?
I'm all for "saving" the euro. Just not in a way that stores up an even greater catastrophe two years from now.