So the 27 member Euro-Zone members did not reach an agreement on any solution to the ongoing Euro-Zone debt problem and Chancellor Merkel and Germany are being seen as killing the Euro. Why this surprises anyone is a mystery because Germany is the only stable and successful economy in Europe – or at least Western Europe. Essentially the solution has two parts – strict rules governing the fiscal and economic policies of the members and the issuance of “Euro-Bonds”. These bonds would be supported and guaranteed by the Euro-Zone members.
This seems simple and straightforward unless of course you are German. The Euro-Zone members are in love with their socialist programs, they like their 6 week vacations, short work weeks, high salaries, and early retirements. Even feeble attempts to rein in some of these government programs has led to riots in Greece and Italy – the governments might see the necessity for these changes but the recipients – the voters – do not. Of course the German voters see things quite differently since they are the hardworking taxpayers whose taxes have already gone to bailing out Greece and their irresponsible financial commitments. The German taxpayers are simply tired of being the financial savior of countries whose irresponsible financial programs have left them virtually bankrupt and expecting Germany to bail them out.
The Euro-Bond is a great solution for those irresponsible countries because the bonds would be guaranteed by the collective membership. Of course the largest guarantor would be Germany while the greatest abusers would be given breathing space without making any major changes to their cradle to grave programs. Chancellor Merkel sees this as a bad idea and at best a band-aid because it would merely avert the immediate crisis without actually improving the long range economic situation plaguing Europe.
The reality is Western Europe is not competitive in the world markets. Only Germany has an export economy supported by hard working taxpayers, while countries like Greece have tax policies that are laughable. In Greece the individual taxpayer is allowed to simply state how much they earned so the tax revenues don’t even approximate the cost of their government programs. The French – like most socialist governments – see employment as the objective rather than productivity and competitive position. So their solution has been to reduce the work week hours to well under 40 and any thought of increasing that has led to near riots. The supreme irony there is that France still sees itself as a world power and a peer – if not superior – to Germany. Of course France isn’t a basket case like Greece but it is nowhere near the economic power house of Germany.
Germany is emerging as the dominant force in Europe and is rapidly accomplishing the objectives that they failed to achieve in two world wars. Germany is increasingly determining the policies that Europe must follow and the only European government that seems immune to German dominance is the UK. The Fourth Reich is being born.