July 14, 2015 - 7:45 AM
| Greece: Germany victim of euro coup again by France?
By Michael Hennigan, Finfacts founder and editor
July 14, 2015 - 7:45 AM
Angela Merkel, German chancellor, and Matteo Renzi, Italian
prime minister, at the Federal Chancellery, Berlin, July 02, 2015
Here we present a contrarian view that Germany may have been the victim of a
coup by France at the weekend to save the euro by breaking the rules
again, in the view of the German people! — terms and conditions apply and this piece shouldn't be read as
opposition to helping Greece but as a presentation of a nuanced view to the #ThisIsACoup
reaction on Twitter, to the deal on a third bailout for Greece.
Germans tend to be a risk-averse people — yes, that is quite a paradox in the
context of two devastating wars in the last century — in the World Values Survey
which operates in over 50 countries, for 18 developed countries a question on
risk showed that Japan and Germany had the lowest propensity by far to take
risks and also come in at the lower end of the fertility scale, together with
Russia. The average age of a German women having her first child (30 years
is one of the highest in the world. The population ratio under 15 years of
age is 13% compared with 19% in France and 21% in Ireland.
In a sample of 9 OECD countries, Germany had a share of direct shareholders
(shareholder ratio) of less that 6%, compared with a ratio of roughly 25% in the
English-speaking countries. The success of Aldi and Lidl discount supermarkets
also point to caution as does the €2tn in ordinary savings accounts.
Simon Kuper, The Financial Times columnist,
in a piece published in 2013 speculated that Margaret
Thatcher’s early opposition to German reunification gave
François Mitterrand, French president, an opening to demand
support of Helmut Kohl, German chancellor,
for the launch of a single currency. A year before in 1988,
Jacques Delors of France, the European Commission
president, had set up a committee of central bankers plus himself as
chairman, to explore the issue of a common currency.
In an interview conducted for a journalist's PhD thesis, Germany's
longest-serving postwar chancellor had said that he would have lost any popular
vote on the euro by an overwhelming majority.
"I knew that I could never win a referendum in Germany," he said.
"We would have lost a referendum on the introduction of
the euro. That's quite clear. I would have lost and by seven to three."
The Daily Telegraph
wrote in April 2013 that the interview was conducted by Jens Peter Paul, a
German journalist in 2002, the year when the Deutsche Mark was replaced by euro
notes and coins, but was only published in 2013.
In it, Kohl describes adopting the euro as an emblem of the European project,
which he said had prevented war on the continent. Born in 1930, Kohl's politics
were shaped by his country's history in the 1930s and 1940s; his final years in
power were focused on promoting European unity.
In the interview, he said: "If a chancellor is trying to push something through,
he must be a man of power. And if he's smart, he knows when the time is ripe. In
one case — the euro — I was like a dictator ... The euro is a synonym
for Europe. Europe, for the first time, has no more war."
As for Mitterrand using the euro as a bargaining chip, a man who could be in
both the Résistance and Marshall Pétain’s Vichy government at different times,
knew how to play his cards.
To mollify the Germans, the architects modelled the planned European Central
Bank on the Deutsche Bundesbank, the publicly respected German central bank.
In addition there would be no bailouts, no financing of governments and no
common bonds — which Ireland could hardly support as it opposed tax
harmonisation to protect the low corporate tax rate.
The architects hadn't provided for a severe recession but the Euro Area now
has a rescue fund and an evolving banking union and on
Monday Angela Merkel, German chancellor, agreed to talks going ahead on a third
Greek bailout that will cost €86bn or more.
an epic miscalculation by the Greek government that it would force big
concessions from the other Euro Area member countries by leaving the second
bailout expire on June 30, last Thursday Greece's new finance minister presented
proposals that were mainly in line with what had been rejected in June.
The focus of the weekend marathon talks was to put
in place a system to avoid commitments lapsing and a need for a fourth bailout.
Greece will eventually need debt relief but in the short-to-medium term, with
low interest costs and long maturities, the priority should be a credible growth
We wrote last week that Greece was Europe's star economic performer in
1950-1973 and like France it has run a deficit every year without fail since
1974 and 1975 respectively.
France didn't want a Grexit (Greece's ejection from the Euro Area) that would
strengthen the control of Germany and its prudent allies, including the former
communist countries, in the single currency area.
France did contribute to the solution by sending a team to Athens to help
draft the reform proposals and presumably talk sense to the Greeks.
Apart from the privatisation fund, Germany provided the realpolitik on how to
implement the reforms that France helped draft.
So who launched the coup d'état?
Greece was star economic performer in 1950-1973; Budget deficits every year
Irish lessons for Greece on growing exports and investment
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