“Sell your islands, you bankrupt Greeks—and the Acropolis too!”
It was the headline that ran this month in Bild, a German tabloid. While the quote was a bit more colorful than the German politician’s actual statement—”A bankrupt party must use everything he has to make money and serve his creditors” and that “Greece owns buildings, companies and several uninhabited islands, which can now be used to repay debt”—it wasn’t that far off either.
Even Germany’s paper of utmost gravity, the Frankfurter Allgemeine Zeitung, is losing its composure with the profligate country. It recently noted that in the midst of all of the Greeks’ petulance over raising its pension eligibility age from 61 to 63—including two nation-wide and crippling strikes— Germany has raised its own pension age from 65 to 67. The paper then asked sardonically: “Does that mean that the Germans should in future extend the working age from 67 to 69, so that Greeks can enjoy their retirement?”
Germany is fed up with making weighty sacrifices in the name of “European unity.” The hesitancy of the Euro-zone’s biggest economy has thrown a wrench into an EU bailout. Even as next week’s EU summit in Brussels approaches, it is still wholly unclear whether EU partners will intervene. On Friday, the president of the European Commission, José Manuel Barroso, asserted that the commission is ready to propose a bailout plan that would likely involve some combination of loans and borrowing guarantees for an estimated 25 billion Euros. But comments by senior German officials Friday signaled that Germany is not. Indeed, Germany is pushing for an International Monetary Fund rescue instead.
The interesting thing is why Germany is reacting this way now. After all, German taxpayers have been financing European currency, not to mention farming subsidies and highways in Spain and Ireland for decades with hardly a grumble. Indeed, the creation of the European Union in the 1950s has been seen by Germany as the perfect opportunity to bury its WWII image.
But times have changed. Germany is mired in its own recession. And for the first time in a long time its citizens are feeling anxious over their financial present and future. Then there’s Greece’s uncanny ability of adding insult to injury. In the midst of discussions over an EU bailout and consequent penalties championed by Germany, the Greek consumer organization has actually called for a boycott of German products. Germany’s demands for needed budget cuts have simply been too unpalatable to the Greeks.
More chaffing still is the recent Grecian cry for WWII remittances. The mayor of Athens has demanded $95 billion for the damage the Nazis left behind after the war. According to a Greek minister broadcast on BBC, the Nazis “took away the Greek gold that was in the Bank of Greece, they took away the Greek money and they never gave it back.”
Some assert that Germany is approaching the end of its rope with the EU. It is now run by a generation with no personal memories of the war. And it’s only a matter of time until they deem that that enough penance has been paid. Others, however, maintain that Germany is unlikely to actually let Greece default when it can instead use its deep pockets to impose strict conditions on Greece and secure primacy within the EU.
For the time being, investors are growing more and more skittish. On Friday the Euro sank to the lowest level in nearly two weeks.