The "haircut" agreed for most of Greece's debtors in early March makes it clear that Europe's problem is Germany's problem, too. A haircut is a selective default, and the Frankfurter Allgemeine Zeitung, the country's most influential daily, bluntly pointed out that German taxpayers were among the creditors selected. The newspaper estimated German losses from the plan at €14 billion — about €1,000 for a family of five. That won't break the bank, but it is real money, and most Germans presume it to be only a down payment on Greek, Spanish, Portuguese and Italian liabilities that may stretch into the trillions. When finance minister Wolfgang Schäuble tried to suggest that taxpayers were no longer on the hook, an acerbic columnist at the Frankfurter Allgemeine asked how stupid he thought the taxpayers were.
Germans have been fed a lot of nonsense about the euro. Often they will spout it right back at you. When I asked a Bundestag member last autumn what political benefit Germany had got out of the euro, he replied with an earnest smile, "No Wall. Sixty years of freedom and peace." But the Berlin Wall came down not only before the euro was introduced, but before it was even planned. As for those 60 years of freedom and peace, the currency didn't enter circulation until 57 years after the war. To top it off, my interlocutor was from the former East Germany.
Outside of the political classes this willingness to consent to polite clichés is hitting its limits. In last September's Transatlantic Trends Survey published by the German Marshall Fund of the US, slightly fewer Germans said they believed the euro had helped the country than hurt it.
It won't do to exaggerate, of course. Things are going well in Germany itself, especially considering that most Western countries remain in economic peril. Germany's difficulties are imported. The euro tethered non-creditworthy economies with lots of growth potential — such as Ireland, Spain and Greece — to sluggish, predictable, reliable Germany, at a time when Germany was struggling for oxygen under the weight of reunification. In other words, the new currency took a set of rules that were appropriate for an order of cloistered nuns (the Germans) and applied them to a bunch of randy teenagers (the Southerners).
The result, in the best of cases, was excessive borrowing and a housing boom more excessive than even that of the United States, but minus its reserve currency. In the worst of cases — where political corruption was added, as in Greece — the money didn't even go into anything as real as Spanish beach condos and Irish country clubs. But once their economies collapsed into debt, these countries found themselves without the traditional instrument for exporting their way out of financial messes: devaluation. Some economists had always warned that the euro was being mis-sold to citizens because it had a flaw. Countries cannot share a currency unless they share a government, preferably including a central bank. It turns out those economists were right.
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