[pdkl95]

The problem in Greece[1] is a combination of the EU centralizing money but not monetary policy, and the only regulatory tools available being controlled by inflation-phobic germans and the class-specific "put option" they imposed on Greece (et al) with the regressive "austerity" policies.

[1] I recommend this explanation by (Brown University prof. econ.) Mark Blyth: https://www.youtube.com/watch?v=B6vV8_uQmxs#t=674

[allendoerfer]

You realize, that we inflation-phobic Germans have only one vote in the ECB and that the ECB is in fact doing everything to get some inflation going. Have you noticed, that the Euro nearly reached the Dollar, while the Fed itself was printing money like crazy?

I realize the horrible situation the Greek people are in, but you cannot just say, that a bit more inflation and a bit less austerity would have solved the thing. Greece had neither an economy that exported anything nor a working administration. Greece could have gotten plenty of EU investment money, they just did not file the papers. How can you expect money invested there to not mysteriously get lost on the way?

I think the idea to couple payment tranches with accomplished reforms was good, but some of the measurements clearly went to far. The core problem is, that we wanted to have them in the EU badly when everything was great, so we were okay with them cheating on the requirements.

I would argue that East-Germany had more substance 1990 than Greece has today. There was a massive investment program and still today East-Germany is not at the level West-Germany is. West-German states are heavily criticizing the systems to support the east. The average German simply does not want to send money to lazy Berliners (which is a German state receiving money from the others and builds airports with it, you might have heard of).

Unfortunately we cannot do the same with Greece, because the required solidarity is just not there yet - and Germany is not really the problem here: There are countries in the EU with lower standards of living that would never accept this. So we kind of have to operate on the living patient here. Get some reforms, invest some money, repeat. Otherwise the emerging far-right parties will take over.

[toyg]

> There are countries in the EU with lower standards of living that would never accept this

Hiding behind smaller countries is new, but I can understand the German public is running out of excuses to justify their egoism.

Thing is, all this could be solved tomorrow by introducing collective eurobonds (or similar debt-sharing facilities) and making the BCE a real central bank. But that would level the playing field a bit too much for German tastes.

> How can you expect money invested there to not mysteriously get lost on the way?

Their corrupt political class has been swept away. If you don't extend some credit to new recruits who had no responsibility whatsoever in the disaster, when will you ever do it?

> Unfortunately we cannot do the same with Greece, because the required solidarity is just not there yet

Where there is a will, there is a way. A certain fraulein said so herself a few days ago. If you want to do it, you do it. If you don't do it, it's because you don't want to, simple as.

> Otherwise the emerging far-right parties will take over.

Newsflash: the german chancellor (a law graduate) is a far-right dude. Jeroen Dijsselbloem (agricultural policy "expert") is well to the right of his Dutch Labour Party, and in fact it's costing them activists.

European economic policy is dominated by right-wing ideas right now. Are you saying we should expect even worse, coming from the North? It wouldn't be the first time.

[allendoerfer]

Eurobonds would indeed solve this for small countries, but would effectively lower the overall standard in the long term. They introduce the free rider problem. Why would you ever fix your financial situation if you remove any incentive to do so? I would love to see Eurobonds, right after we introduced a unified tax system. Good luck getting the UK to do that. If we do not do this, we will make the same mistakes again we did as we gave Greece the same currency as the Netherlands, Belgium and Germany.

So lets start with easier tasks and save money by creating a single European military or introduce single European welfare systems, which would lessen the pain, too. These tasks are already hard enough. If you lose the people on this we can forget about it all for a long time.

I think your intentions are good, but your arguments are weak and you are just raging. I would love to see a unified Europe with a unified standard of living, but you cannot simply introduce things. Think about the consequences.

> Their corrupt political class has been swept away.

And now we have a coalition of far-right and far-left wannabe rockstars. The whole administration is still the same, corrupt and to a large extend unable to do its job. I give them that they are trying to poker for their country, but I fear the point the others are fed up with this bullshit, simply ignore them and let them default. The media is more and more telling the story that a so called Grexit would not be that dangerous anymore.

> Newsflash: the german chancellor (a law graduate) is a far-right dude.

The German chancellor is a physics graduate and her party (CDU) moved to the left in the last years. There are effectively 3 social-democratic, center-left parties in Germany right now: The Greens, SPD and CDU. Other than thinking a bit more backwards than the other two, it is all about introducing welfare programs as presents for being elected.

That is why she has been ruling for so long. She effectively crushed the SPD with this strategy: They introduced hard reforms ten years ago and she moved to the left. No there is not enough room between the CDU and the Lefts for the SPD. She simply ignores the AFD to the right of her as they do their best to destroy themselves already and were never an "alternative" - as their name suggests - for most Germans.

[toyg]

> Eurobonds would indeed solve this for small countries, but would effectively lower the overall standard in the long term.

It's unrealistic to think the whole of Europe will ever have the exact same economic standard as Germany. This doesn't happen even in the US, which have been a proper federal union for more than a century now. If we want a real union, we will have to harmonize things in both directions -- and yes, that means the Germans will have to endure in similar ways as they did when they annexed the DDR. The FED makes economic policy choices to suit the whole federation, not just California or New York.

If this does not suit the German people, then maybe we should just give up the federal project altogether.

> So lets start with easier tasks and save money by creating a single European military or introduce single European welfare systems

The military is already highly integrated through NATO, to the point that the UK for months relied on French capabilities for their naval aircraft carriers, while their own were being repaired or manufactured. If you mean integrating foreign policy, that's much harder than harmonizing a bunch of financial arrangements, because it's the sort of thing the man on the street will have an opinion about: ask a taxi driver what an eurobond is, and he'll just blank out. Same for welfare. Besides, you cannot integrate welfare without common money pools, because welfare is by definition subsidiary: the rich pays for the poor. So if you want an integrated welfare, you need integrated finances, and integrated finances require integrated debt, i.e. eurobonds.

Integrated finance and debt is the next big step for the monetary union, there is no way around it. Most people did not realize this had not been done when the Euro was introduced, and now we're seeing the problems that come from this approach. I like to think that the Maastricht "forefathers" actually expected this to happen and let it be, like Hari Seldon would have done, in the assumption that European elites would inevitably get around the inevitability of certain hard choices once faced with them. It's a more optimist view than thinking they were just idiots.

> Good luck getting the UK to do that.

The UK does not belong in a federal EU. They should be kept in a friendly economic zone, but they should be excluded from any decision-taking body, like it should happen for any country not adopting the Euro. Otherwise the fedealist project will forever remain a dream. This I've been saying for 20 years, btw. There is no point trying to keep them in -- England is the unofficial 51st State and will remain so for the foreseeable future. I say that as an European UK resident, so against my best interests, but it's the hard truth. If excluding England means losing the more "europeist" NI, Scotland and EIRE, so be it.

> And now we have a coalition of far-right and far-left wannabe rockstars.

Tony Blair really was a wannabe rockstar, and he ended up being the most skillful politician of his generation in the UK, and one of the most influential across the whole of Europe. So let's leave the weak ad-hominem to tabloids please. Besides, there is more economic policy intelligence in one of Varoufakis' fingernails than in you and me combined. You have to face the fact that these guys are actually good: they took a smalltime leftist operation and got them in government. They managed to coopt some of their worst enemies on the right and basically took them out of the game. They tried to build a coalition across countries with similar interests, and the failure there is just due to political weakness on the other side (Hollande is hapless, Renzi has no electoral mandate, and Spain is in the process of changing government), although there is some evidence that they might be coming around the idea of putting pressure on Merkel. If you don't help them now to establish a modern bureaucracy and statehood, you'll condemn Greece back to colony status, with periodic coup d'ètat and all that. Which would be very dangerous, considering the Russian neoimperialistic approach and eternal instability in the Balkans. But if you make them heroes to their people, making them appear as the saviours of national pride, they will have the political capital to make bolder choices in any area.

> The German chancellor is a physics graduate

Apologies, I got tripped up by UK exceptionalism: I referred to the chancellor in UK terms, i.e. the minister of Finance, Schauble, who is in fact a law graduate and much to the right of Merkel. And if the Merkel coalition is the most social-democratic effort Germany can produce, Europe will soon be a thing of the past.

[allendoerfer]

First of all, minor nitpicking, we did not annex the DDR. The DDR has been stolen from us and its people managed to get rid of their oppressors on their own.

> If this does not suit the German people, then maybe we should just give up the federal project altogether.

Sorry, but that is just fatalistic. Europe will never be the US and does not need to. Germany itself is a federal project with differences among the states. Take the UK, Spain or Belgium for even harsher examples. With these differences even within the European states, you cannot expect them to give away control over economic and fiscal policies without any gain of influence. That is not how democracy works. If my money is spent, I want the right to vote on how it is spent.

I also want the UK in. For hundreds of years Europe’s situation was decided by how well its great powers got along with each other. I think the UK is essential for the definition of Europe. Besides that: The UK has virtually no industry left and London is the biggest financial market in Europe. As someone living in Frankfurt I am okay with that. But do you really think the UK does not know, that Germany will not let them leave without taking London away? I recently talked to a German MEP, who said this in nicer terms. I think "Better together" will be nothing compared to the bank sponsored campaign that will be started once the UK actually tries to leave.

> Besides, you cannot integrate welfare without common money pools

That is true, but there are common money pools. Just start to move parts of the welfare systems up one level to the EU and increase their funding.

> Tony Blair really was a wannabe rockstar, and he ended up being the most skillful politician of his generation in the UK, and one of the most influential across the whole of Europe.

You might take a look at the disaster that is currently happening in the middle-east, that he and his buddy Bush caused so skillfully.

> You have to face the fact that these guys are actually good: they took a smalltime leftist operation and got them in government. They managed to coopt some of their worst enemies on the right and basically took them out of the game. They tried to build a coalition across countries with similar interests, and the failure there is just due to political weakness on the other side […] But if you make them heroes to their people, making them appear as the saviours of national pride, they will have the political capital to make bolder choices in any area.

You might call the ability to increase once power skillful governing, I think we all learned that we are better of with democratic majorities behind the decision itself instead of the benevolent leader who makes them.

> […] Schauble, who is in fact a law graduate and much to the right of Merkel.

I do not like him either, but because of his former job as Secretary of the Interior [0]. Finally not spending more than you have is an achievement he will be remembered for, even if he was in a unique situation to do it easily.

> And if the Merkel coalition is the most social-democratic effort Germany can produce, Europe will soon be a thing of the past.

They introduced pension presents for mothers and workers, regulated rent and broker commissions for tenants and introduced a minimum wage in the past two years alone. This is not a defensive argument for Merkels achievements, I could think of much better ways to spend that money, but an argument for the CDUs social-democratic character.

Edit: Forced end of conversation by HN. Nice discussion, we will see how it will work out :)

[0] https://en.wikipedia.org/wiki/Stasi_2.0

[jmngomes]

It's appalling that overbloated public spending due to corruption and crony capitalism isn't even mentioned as a cause of Greece's problems, when it is in fact a major determinant (just like in Portugal)

[jacquesm]

The problems the Greeks face are a lot more complicated than that. For one previous governments (ages ago) manoeuvred things in such a way that future Greek governments would end up holding the bag for their unsustainable and populist measures.

The 'austerity' policies you put between quotes hit the regular Greek population where it hurts and meanwhile do nothing whatsoever to really affect the future of Greece in a positive way.

To see the problem in financial terms applied today only is to miss the wood for the trees, this problem goes back decades.