Germany and Greece: An Impossible Relationship?
This morning the markets in Europe rose giddily on the belief that the problems with Greece were resolved, despite the bureaucrats insistence that they were in fact, not at all. By late afternoon in Europe, it had become clear that there was no resolution, but the talks continued. I swear I’ve had breakups that seemed an awful lot like this!
Most people have at some point in their lives been in a relationship, be it romantic or platonic, with another person who has a different view of “The Way Things Ought to Be.” This can be over something as mundane as how frequently one ought to exercise to how much and how loudly one ought to laugh or perhaps just how much fun is appropriate in one’s life or the really volatile one, just how wild one ought to get into the wee hours! Having a material discrepancy over “The Way Things Ought to Be” can be highly destructive to the relationship, leaving both parties fuming at each other in an indignant, self-righteous huff.
Germany and Greece: An Impossible Relationship?
These two are the sovereign equivalent of that couple that seems rather fascinated by each other, perhaps some seriously passionate sparks on occasion, but are eventually at each other’s throats, utterly baffled as to how the other cannot see just how clearly WRONG they are! Each is convinced that if they just lay down the law and point out precisely what the other ought to be doing instead of what they are doing followed by an ultimatum, the indisputable “rightness” of their position will become clear and they’ll get their way… because that’s so often how human nature works!
Deep in German culture is a profound belief, darn near religious, that inflation can never be used to manage debt. For Greece, that’s a bit like arguing ouzo is best used as a floor cleaner! The nation has been wracking up debt then discarding it in a variety of ways, often via inflation for over two centuries. Carmen Reinhard and Kenneth Rogoff, in their book “This Time Is Different,” determined that between 1800 and 2008, Greece spent 50.6% of the time in default or restructuring!
Germany on the other hand derives great joy and satisfaction from strictly following the rules – tell that to a nation so tied up in bureaucratic red tape that trying to resolve the proper way to handle something there goes a bit like this.
A Greek entrepreneur goes to a public agency and asks, “What do I need to be able to do this thing X?”
Answer: “A, b, c, d, maybe e, probably f, not sure though about g.”
Hmmm, OK… so our entrepreneur goes to another agency and asks the same question.
Answer: “E, f, not sure about a, definitely not c but definitely g and we’ve never heard of b.”
Exasperated our entrepreneur seeks the advice of a prominent attorney, thinking they’ll be able to properly chart the course, only to discover that they’ve got no idea either. There are so many laws sitting on top of contradictory laws and regulation upon regulation that there is no clear answer. Ta da! Welcome to graft. If there is no one clear answer on the books, you just have to buy a temporary one from whomever is in charge that day.
In the end our entrepreneur gives up, forgets trying to build a business and gets a job as a public employee!
So here’s the problem now. Germany thinks that if it strong arms Greece out of the eurozone, the rest of the eurozone trouble-makers will get scared straight, fall back in line and Germany can relax that everyone will from now on start playing by the rules. So far what Germany is pushing will not allow Greece’s economy the room it needs, culturally and financially, to change – “Dear Eurozone: I love you but you are just no good for me.”
What if Greece gets the boot, defaults, starts all over again and after a while its economy is more robust than Italy’s or Spain’s? That’d be a bit like having one’s ex show up to a friend’s party with their gorgeous and very successful new significant other; more than just a little bit awkward.
Can’t you just see the love?
