The Dairy Cows: The Ignored German Public In The Greek Crisis

Noted popular sophist Thomas Piketty last week lent his name to an open letter to German Chancellor Angela Merkel to end austerity, and of course Paul Krugman has similarly opined for a bankruptcy, with Greece's unsustainable debt forgiven in part. But what exactly does any of this mean? A search for villains entails picking sides: Germany or Greece, creditor or borrower. The left, of course, reflexively hates the rich, or at least, wishes to consume wealth without consequence, and so their cosmology turns the Germans into sinners, as Jacob Soll recently did in the New York Times. Soll has no patience with talk of being repaid:

When the panel split up, German attendees circled me to explain how the Greeks were robbing the Germans. They did not want to be victims anymore. While I certainly accepted their economic points and, indeed, the point that European Union member countries owe Germany so much money that more defaults could sink Germany, it was hard, in Munich at least, to see the Germans as true victims.

It's obvious but frequently overlooked in such cramped accounts that in fact Germany is not a monolithic entity, but three separate ones:

1. The German banks.
2. The German government.
3. The German polity.

German banks lent money to Greece on the tacit understanding that the European Central Bank or ultimately the German government would bail them out if that sovereign debt went bad, in much the same way as US banks believed they would be bailed out if Fannie Mae or Freddie Mac went bust. As in most places, the government is beholden to the banks, but an outright bailout would be political suicide at the next election. But let us suppose a bailout were possible, through some sort of procedural trickery. Who would pay for it? The answer is obvious, and behind door number three: the German public. Soll, like so many other liberals, confuses "society" with "government", and reduces all three to a single point in his intellectually crabbed world. It is curious, therefore, that a supposedly liberal newspaper would support robbing of the common people in this way, and yet here we are. Soll gives them no more thought than one gives dairy cows.

The Empty Threat Of Broken Greek Printing Presses

So, the Greeks having thumpingly rejected the ECB offers of conditional loans (and missed their latest payment deadline), the logical assumption is that Greece will exit the European Union and reboot the drachma. Except, finance minister Yanis Varoufakis says they can't, because they have no printing capacity:

"We don't have the capacity," Yanis Varoufakis told Australian public radio network ABC.

In 2000, the year before Greece joined the eurozone, "one of the things we had to do was get rid of all our printing presses" as part of the bloc's assertion that "this monetary union is irreversible," he said.

"We smashed the printing presses -- we have no printing presses," Varoufakis said.

(Well, actually, make that ex-finance minister.) But in truth, it wouldn't be that hard; private firms in the United States could print the currency, as they did for Lithuania after the Berlin Wall fell. It might be embarrassing, but no more so than being a deadbeat.