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When ideas fail, words come in very handy - Goethe.
on October 30, 2014
Martin Wolf has a problem with Germany. His book is full of bank bashing and German bashing. They are easy targets so why not take a free kick and win some popularity. He is a greater wordsmith than Alan Greenspan. So what did I learn? The financial world is still fragile, the next crash will be bigger, in Europe the crisis is not over, it's a balance of payments problem, weak demand etc. etc. Wolf tells you very precisely how imprecise the world is. Not sure if that really helps? But then he comes up with simple but brilliant conclusions, for example, Europe can blame Germany and the U.S. can blame the banks.
In Wolf's Conclusion Chapter (page 341) he writes that Europe, under German influence, has sought to introduce Liquidationism but only on crisis-hit countries which has imposed huge costs on the peoples of some member countries. On page 177 he writes "The problem, in brief, is Germany". On page 337 "In accordance with the views of Germany, the reformed Eurozone is designed as a system for imposing discipline upon wayward countries: it is a 'discipline union'.....In essence, then, member countries are free to do precisely as they are told". Lack of discipline is what got these countries into trouble in the first place, so to argue against discipline does not seem very clever to me.
On page 339 Wolf writes "the cost would be borne by the hapless taxpayers of the crisis-hit countries". BUT THESE CRISIS-HIT COUNTRIES WERE NEVER TAXPAYERS. In 1994 I spent a week on the Island of Santorini Greece. The economy on this island was booming already back then, new hotels were being built, restaurants were busy, and they were expecting a huge influx of Russian tourists after the fall of Communism. One restaurant had a queue of customers at the door each night. One night I said to the owner, you need a bigger restaurant, why don't you expand? He told me without hesitation, no one pays taxes in Greece, it's 90% cash, he doesn't know what to do with all the money he is already making, why would he need a bigger restaurant? Wolf argues that the Germans knew about this problem yet kept lending money, so it's just as much their fault, yet they should now keep lending money because to get out of so much debt you need more debt (page 273). That may be true but nowhere in the book does he explain how to change these peoples' character. Have you ever done business with them Mr. Wolf? My family bought a business in Sydney, managed by some Greeks. You have no idea how callus and dishonest they were. My family suffered for over a year. What goes around comes around. I have little sympathy. And to speak of these countries being in a depression is a beat-up, simply scaremongering, to make Germans look bad.
It's a culture problem, and yes, if they don't like discipline they should leave the union. Many Greeks and southern Italians have already moved here to Australia over the last 50 years, and they are thriving here. They should all come to Australia! Not much discipline here to worry about and maybe the Germans could even pay for the flight over......? Would the US consider taking some as well?? Detroit has many empty houses, maybe the unemployed Greeks, Italians and Spanish might move to Detroit to get away from their depression? Even if you paid them, I don't think they would go. Maybe the Germans are not so bad after all?