Of Greeks and gifts

I'm rapidly coming to the opinion that my father was right about Germany.

When the Berlin Wall came down in 1989, he was the only person I knew who didn't think it was an unreserved blessing. As he saw it: for the past 40 years the whole of German policy had been focused on the single goal of reuniting the country, and with that achieved, it would soon turn its attention outward. The rest of Europe had reason to fear.

In the 1990s, when "European integration" was in vogue, he shook his head and muttered darkly about German imperialism. Something about the country's geography and history. I got a glimmering of what he meant when I briefly studied the life of Frederick the Great, but I still thought that tying it to the present day was paranoia. Besides, I reasoned: as long as they didn't start building an oversized army, what's the worst that could happen?

Then came the Eurozone, and he threw up his hands in horror and prophesied doom and catastrophe and the next European war. Those with long memories may recall that, in the beginning, there were "strict rules" about who could join the Eurozone: you had to have public debt below something, a defecit consistently below something else, exchange rates stable over N years and so forth. He predicted - correctly - that those "strict rules" would, quietly and without fanfare, be relaxed, because otherwise Italy wouldn't get in, and without Italy, the Germans wouldn't see the point. It's the Holy Roman Empire all over again.

Again I laughed at his fears. Clearly, his generation has a chip on its shoulder about the Germans, but that was all a long time ago. Me, I've been to Germany several times and I've met any number of Germans, even known a few. They're perfectly normal people. Nothing scary about them.

Now we have the Greek crisis. And suddenly, it's Germany that's playing the heavy.

The Greeks have created an economy where they can run a primary budget surplus (i.e. before counting debt repayments) even with over 25% unemployment. That's no mean feat.

More importantly, though, it's stupid. Governments are supposed to increase spending in recessions (defined loosely, but "over 25% unemployment" would qualify by just about any plausible yardstick) and reduce it afterwards. But the terms of the Greek bailout allow no such latitude. Greece is required to run a primary budget surplus - a large one - every single year for the next 20 years, come boom or bust. The Germans should know from their own history what happens when you impose terms like that on a country: it happened to them in 1919, and within ten years they were setting a benchmark for hyper-inflation that stands to this day.

Realistically, I think the Greeks have two options: they can leave the Eurozone peacefully, or they can declare war on it. I'm honestly not sure which outcome the ECB is currently trying to trigger.