Merkel Wins Again
Once again, Angela Merkel has held her ground and forced the other EU leaders to accommodate Germany's policy concerns. This time, it's a set of amendments to the Lisbon Treaty to deal with sovereign debt emergencies.
Once again, Angela Merkel has held her ground and forced the other EU leaders to accommodate Germany’s policy concerns. This time, it’s a set of amendments to the Lisbon Treaty to deal with sovereign debt emergencies.
See my New Atlanticist write-up “Merkel Wins EU Reform Showdown” for a longish backgrounder. My bottom line, though:
Aside from power politics, Merkel happens to be right here. While there are legitimate concerns being expressed by the European Central Bank and others about running off investors and destabilizing the Euro with talks of private liability for loans to governments who default, there simply has to be a mechanism to force national governments to act responsibly. The common currency forced Germany to act as “Europe’s ATM” and bail out the bad behavior of Greece and others — with very little consequence to bad actors. That simply wasn’t a sustainable position without restoring moral hazard.
Very little consequence for the bad actors? Jim you really need to get up to speed with what’s happening economically in Europe before pontificating. The current consequences being experienced in Greece, Ireland and Spain are far from “little.” I totally agree with Merkel’s stance which i’m sure is shared by a number of other Euro members but to suggest that the aforementioned three countries are not suffering considerable economic pain as a consequence of their fiscal profligacy is totally remote from what’s really happening.
They’re suffering some of the direct costs of their actions. But they’ve passed the lion’s share off to the non-profligate Eurozone members who got none of the benefits, notably Germany.
It’s like the banks that got bailed out in the USA. Yes, they suffered some losses. But they passed most of the pain to others without the CEOS getting fired, stockholders getting wiped out, etc.