Thursday, June 30, 2011

Böse Bozos

With awe-like admiration, we thank Clarsonimus, the evil genius behind Observing Hermann for this find. Germans prone to imagine the Greek government and population as thankless spongers should bear in mind that most of the Greek debt that they’re being asked to help underwrite is owed to German banks.

They should cast that unimpeachable historical memory (more like selective historical memory) they keep rattling on about:

Ritschl: That may be, but during the 20th century, Germany was responsible for what were the biggest national bankruptcies in recent history. It is only thanks to the United States, which sacrificed vast amounts of money after both World War I and World War II, that Germany is financially stable today and holds the status of Europe's headmaster. That fact, unfortunately, often seems to be forgotten.

SPIEGEL ONLINE: What happened back then exactly?

Ritschl: From 1924 to 1929, the Weimar Republic lived on credit and even borrowed the money it needed for its World War I reparations payments from America. This credit pyramid collapsed during the economic crisis of 1931. The money was gone, the damage to the United States enormous, the effect on the global economy devastating.

SPIEGEL ONLINE: The situation after World War II was similar.

Ritschl: But right afterwards, America immediately took steps to ensure there wouldn't be a repeat of high reparations demands made on Germany. With only a few exceptions, all such demands were put on the backburner until Germany's future reunification. For Germany, that was a life-saving gesture, and it was the actual financial basis of the Wirtschaftswunder, or economic miracle (that began in the 1950s). But it also meant that the victims of the German occupation in Europe also had to forgo reparations, including the Greeks.
So who exactly is the bum here, and who has been the compassionate society that stepped in, in a time of need and crisis? Germany? Pscheah right!
SPIEGEL ONLINE: If there was a list of the worst global bankruptcies in history, where would Germany rank?

Ritschl: Germany is king when it comes to debt. Calculated based on the amount of losses compared to economic performance, Germany was the biggest debt transgressor of the 20th century.

SPIEGEL ONLINE: Greece can't compare?

Ritschl: No, the country has played a minor role. It is only the contagion danger for other euro-zone countries that is the problem.

SPIEGEL ONLINE: The Germany of today is considered the embodiment of stability. How many times has Germany become insolvent in the past?

Ritschl: That depends on how you do the math. During the past century alone, though, at least three times. After the first default during the 1930s, the US gave Germany a "haircut" in 1953, reducing its debt problem to practically nothing. Germany has been in a very good position ever since, even as other Europeans were forced to endure the burdens of World War II and the consequences of the German occupation. Germany even had a period of non-payment in 1990.
It was that healthy dose of USA that seems to have turned that goose-step around. It’s something for them to think about when they’re trying to pawn off the burden onto outsiders using the IMF, or bending Greece over the table for a proper German education.