Germany Was For Debt Relief Before It Was Against It

Germany's biggest rhetorical weakness remains its own recent history.
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Awkward.

Sixty years ago, Germany was not a global economic powerhouse. Frankfurt was not a major international financial center, but a smoldering pile of rubble. And, believe it or not, people actual hated Germans more than Germans now hate Greeks, on account of all of the warmongering and genocide. But then a little thing called the “economic miracle” happened. How? Angela Merkel isn’t going to like the answer.

As negotiations between Greece and its creditors stumbled toward breakdown, culminating in a sound rejection on Sunday by Greek voters of the conditions demanded in exchange for a financial lifeline, a vintage photo resurfaced on the Internet.

It shows Hermann Josef Abs, head of the Federal Republic of Germany’s delegation in London on Feb. 27, 1953, signing the agreement that effectively cut the country’s debts to its foreign creditors in half.

Perhaps Greek Prime Minister Alexis Tsipras can substitute the story of poor Herr Abs for all the Nazi talk when he and Angie sit down and talk about his new plan, in which he agrees to do some things he doesn’t want to do in exchange for her doing something she really doesn’t want to do, namely, return the favor her countrymen received in 1953.

Eurozone leaders expect the request for more aid to be followed up by a full list of detailed policy overhauls and budget cuts that go beyond those Greek voters overwhelmingly rejected in a referendum last weekend….

As a sweetener, eurozone leaders offered to start discussing measures on how to ease Greece’s debt burden, the largest in any European country.

There is one small problem: The German government and media have done such a good job demonizing the Greeks that now 90% of Germans want to see a final solution to the Greek problem.

The frustration with Greece hasn’t backfired against Ms. Merkel. In polls, she and hawkish Finance Minister Wolfgang Schäuble win approval ratings around 70%....

Only 10% of Germans said they were in favor of greater concessions to Greece in a poll published last week.

So, uh, what would that whole Grexit thing look like again? Here’s a helpful, step-by-step guide.

Greece Requests Three-Year Bailout in First Step Toward Meeting Creditors’ Demand [WSJ]
Germans Forget Postwar History Lesson on Debt Relief in Greece Crisis [NYT]
Merkel’s German Critics Say Greek Bailout Was Doomed From Start [WSJ]
What Would Grexit Look Like? [WSJ]

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For all their saber-rattling and bold talk about a final solution to the problem of global financial risk, the Germans haven't done a hell of lot to rein in their banks. There is, for instance, no Großdeutschesvolckerregierung. At least, not yet.