If this were a football game, the referee should call
unnecessary roughness for piling on Germany. The American Left led by
Paul Krugman (The
Harm Germany Does and Those
Depressing Germans) excoriates Germany
for forcing austerity on the rest of Europe. The U.S. Treasury (no newcomer to spending) demands
that miserly Germany spend
more to pull the PIIGS (Portugal,
Italy, Ireland, Greece
and Spain)
out of their economic doldrums. Angela Merkel and her scrooge Germans are
pictured as eating their Kuchen mit Schlag as Greek public employees
lose jobs and unemployed youths riot in the streets. Even the sober Financial Times (Germany
Is a Weight on the World) accuses the German juggernaught of piling up
export surpluses to “beggar their neighbors.”
To understand the liberals’ beef against Germany, we
must go back to the PIIGS borrowing spree that followed the creation of the
Euro. As part of a single currency with strong partners to the North, even the
PIIGS could borrow at low interest rates, and they borrowed voraciously not for
investment but to pump up public spending. Their solvency in doubt as the
financial crisis exploded, the PIIGS could no longer borrow. Suddenly, they had
to live within their own means, except for the limited official loans the
European Union, the European Central Bank and the IMF begrudgingly handed out
to prevent the collapse of the Euro. Greece,
Spain, and Portugal
descended into deep recession with one quarter of the work force unemployed.
go to forbes.com
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