Cantillon: Germans as thoroughly deceived as the Irish

The recent article in Süddeutsche Zeitung about how the Irish people have been conned by their politicians and by Ray Burke in particular makes uncomfortable reading.

The detachment afforded by time and distance made for a powerful narrative but there is some comfort in knowing that we are not alone in being conned by a self-serving political elite, with the Germans themselves being in much the same boat.

As yesterday’s latest set of gloomy German economic numbers – exports suffered their biggest fall since 2009 – testified the Germans have been sold a big fat lie, which is that monetary union was possible without fiscal union and transfers from wealthy members to poor ones..

The Euro lie compounded an earlier lie that, if the Germans embarked on a self imposed path of austerity, they would ensure the competitiveness of their exports which would act as a bulwark against chilly economic winds.

Much of the response of the German political elite to the euro zone crisis can be characterised as an attempt to deliver on their false promises. Hence the almost pathological opposition to measures aimed at alleviating the crisis that might smack of fiscal transfers or the monetisation of national debt.

Germany may well have successfully stymied efforts to utilise these tools, but it could not prevent the inevitable consequences of not taking the only viable course of action. The deep recession that has gripped most of Europe on and off for the last five years as a consequence of the refusal to embrace measures adopted in the US and Britain has finally started to be felt in Germany.

Its natural market – Europe – cannot afford to buy its products and this will remain the case until measures are taken to promote a European recovery.

Almost all of them involve some form of wealth transfer from Germany to the other states, even if they only amount to slightly higher interest rates on German bunds as a result of guarantees given to the European rescue fund.

Perhaps the German media might be better off explaining to the German people how they have been conned about the price of euro zone membership. Once that has been accepted, then Europe can implement the policies needed to lift the continents economy out of recession and ensure Germany’s prosperity.