Thursday, May 17, 2012

Germany Drops All Pretense That Imposing Harsh Conditions on Greece is Economically Based – Germans Want to Punish Greece

But if Greece Defaults and Leave Euro Zone, Germany Also Gets Punished

The European crisis that has been caused by a series of incredibly bad policy decisions of Europe, lead by Germany may be coming to a head.  Paul Krugman, among others has already written about the demise of Greece’s participation in the Euro, and news stories are now dominated about Greece leaving the Euro and the implications of that action, rather than before when stories talked about how the crisis had been solved and how it was inconceivable that Greece or any country could leave the Euro.

At this point in time the just completed elections in Greece have left the country with no government.  Greece has a parliamentary form of government, but a lot of parties means a coalition must be formed to form a government.  A coalition cannot be formed because the second leading vote getting party will not participate in a government with parties that negotiated and support the horrible infliction of pain from the bailout conditions.

There is no question that the leader in Europe from all of this is Germany.  And now there is no question that the policy against Greece is being driven by Germany wanting to punish Greece for its profligate ways.

“It is undisputed that the Greek people have to suffer from the consequences of decades of neglect. There is no easy path,” said Wolfgang Schäuble, the German finance minister, while heading into the meeting. 

Now there is no doubt that Greece lied about its economic conditions in order to get into the European Union.  But there is also no doubt that the rest of Europe knew this at the time, and that they wanted Greece in the Union.  And most of all there is no doubt that the policy imposed on Greece is not working, will not work and cannot work. 

But now we know that a working policy was not what Germany wanted in the first place.  They wanted to punish Greece because Greeks did not act like Germans.  Looking back in history, that’s not always such a bad thing.

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