Was Maastricht another Versailles for the German nation? A reply to Klaus Kastner

versaillesKlaus Kastner suggests that Germans cannot sympathise with my analogy of the Greek Bailout as a new Versailles Treaty because many, in Germany, feel that Maastricht was another Versailles Treaty imposed, by France, upon them. While there is no doubt that France tried, and failed, to adopt a predatory attitude toward Germany (and toward the Bundesbank in particular), the Maastricht-Versailles analogy is unsustainable and patently incorrect – in sharp contrast to the Greek Bailout-Versailles parallelism which is spot on. 

Kastner’s alternative Versailles analogy: Maastricht as a drain on Germany

Klaus Kastner reminds us that, on 18th September 1992, Le Figaro led with the following headline:

The opponents of Maastricht fear that the common currency and the new Central Bank will fortify the superiority of the D-Mark and the Bundesbank. But the exact opposite will happen. If it comes to Maastricht, Germany will have to share its financial might with others. ‘Germany will pay’, they said in the 1920s. Today Germany does pay. Maastricht is the Treaty of Versailles without a war.

Kastner then asks this question of us, his readers:

“Given the choice, would you rather be a borrower who owes billions but who knows that he will eventually pay that debt at best partially, if at all? Or would you prefer to be a lender who has billions of claims but who knows that he will eventually have to write much of that off, if not all of it (without having provided for such losses as yet)? I am not saying that Greece is in a better position. All I am saying is that huge costs will hit Germany once they can no longer be covered up. And they cannot be covered up forever, that’s for sure!”

Maastricht was no Versailles imposed upon Germany

Kastner is right in one important sense: In late 1946 France was persuaded by the United States to drop its insistence that German industry be raised to the ground on condition that France would administer the US-designed European common market. In Charles de Gaulle’s inimitable words: “The EEC is a horse and carriage: Germany is the horse and France is the coachman.” And when a few years later, in a discussion with Henry Kissinger, who asked him how he would prevent German dominance of the EEC, de Gaulle answered: Par la guerre!

Kastner is also right in implying that Jacques Delors’ grand plan, in the lead up to Maastricht, was to usurp the Bundesbank’s autonomy vis-à-vis interest rates policy and gradually to harness the Bundesbank to a primarily French administered Eurozone. Le Figaro‘s headline reflected that ambition. It also reflected something else: The desperate struggle French elites were caught in to persuade a sceptical French electorate to say ‘yes’ to the Maastricht referendum (which almost produced a ‘no’). In this sense, Le Figaro was procuring an illusion that it hoped would sway voters; the illusion that France was about to score another victory against the German by accepting monetary union with Germany. Alas, however offensive that propaganda campaign might have been for the German people (and I have no doubt it was), it remained just that: a sad propaganda campaign that had no basis in truth – as the French people, deep down, understood.

What Kastner neglects to tell us, is that the French elites’ campaign to subjugate the Bundesbank, to usurp German industrial and financial power, was something that the Bundesbank had sensed and fought powerfully against. It destroyed it first by allowing the European Exchange Rate Mechanism to collapse (giving the green light to George Soros to speculate against it) and then forcing France into a savage recession (with interest rates well above what Paris would have wanted) that broke the French elites’ spirit. Then and only then, did the Bundesbank concede to the creation of the euro.

This is why I am arguing that Kastner is wrong: Maastricht was not imposed upon a weak Germany. The opposite happened. Once the inane illusions of the French elites (that they would remain, in de Gaulle’s words, the coachman while Germany is the horse) had been ruthlessly crushed by the Bundesbank (giving rise to a slow burning permanent recession in France – which has been strengthening the National Front on a permanent basis), only then did Germany accept Maastricht, making sure that it would work beautifully in its own national interest.

More precisely, the Eurozone operated as a single currency within which German surpluses would grow inexorably helping its larger corporations to fund their globalisation drive. Part of the surpluses German companies extracted from the deficit Eurozone countries were used to build capacity in China, Eastern Europe, the United States and Latin America. The rest of these surpluses were exported by German banks to the Eurozone periphery funding ponzi growth (real estate in Ireland and Spain; and in the public sector of Greece) which fed, in turn, demand for BMWs and Mercedes-Benz.

And when these bubbles (caused by vendor-financing provided by the German banks to the periphery) burst, the bailouts that followed were nothing more than predatory loans for the purposes of ensuring that Irish banks would not default (as they should) to German bondholders and that Greece would not burn a hole in the books of Deutsche Bank etc. That some of these losses will be passed on to the German taxpayers, after years of ultra low bund yields and a massive flow of capital to the periphery to the Frankfurt banks, can hardly be thought of as a new Versailles imposed upon… Germany.

From this perspective, to see Maastricht as another Versailles imposed upon the German nation is both to underestimate the German authorities of the early 1990s (the Bundesbank in particular) and to err badly regarding the historical record. It is also to add considerable injury upon the destitute Greeks, the wronged Irish etc.

The bailout was a Versailles Treaty for Greece, for Ireland and for the rest of the Eurozoner’s long suffering periphery

In a final note, Kastner argued that there is a ‘technical’ difference between Germany’s post-WW1 and Greece’s current predicaments:

“Versailles required of Germany to pay foreigners (which I guess it didn’t, anyway). The 2010 memorandum required Greece to get by with less money from foreigners than before. Only since the primary balance went into surplus does Greece sacrifice domestic expenditures by prioritizing payments to foreigners. So from that standpoint, the ‘Greek Versailles’ has only begun once Greece turned its primary balance into the positive.”

  • Germany did not, in the end, pay the agreed reparations because it was impossible to do so – as the Allies had imposed repayments on the defeated German nation that its economy could not fund.
  • Greece will, in the end, also not meet the agreed loan repayments because it is impossible to do so – as the troika has imposed repayments on the defeated Greek nation that its economy could not fund.

The parallel is obvious. Kastner’s ‘technical’ difference obscures a grim reality: Greece should never have borrowed the money it borrowed from the troika. That loan was imposed upon an insolvent nation by lenders keen to transfer losses from the books of the northern banks to the shoulders of, first, the Greek taxpayers and, later, the European taxpayers (including to a small extent the German ones). Greece was as much bailed out by the troica as Germany was ‘saved’ by the Allies in 1919.


A rational Europe should never have imposed, and a virtuous Greek government should never have agreed to, the predatory loans also known as the Greek Bailout. They forced Greece in a situation similar to that of Germany after 1919. To portray these loans as a bailout for Greece (and to argue that Greece was simply being asked to live within its means), while at the same time arguing that Maastricht was a form of Versailles imposed upon the German people, is to undermine whatever remnants there are of hope that Europeans can find common ground based on a mutual commitment to Truth and Reason.

30 thoughts on “Was Maastricht another Versailles for the German nation? A reply to Klaus Kastner

  1. Pingback: Yanis Varoufakis: Was Maastricht Another Versailles for the German Nation? A Reply to Klaus Kastner | naked capitalism

  2. Pingback: Die Woche im Rückspiegel betrachtet | Lars Schall

  3. The most shocking revelation to me is the lack of professionalism on the part of Klaus Kastner, who appears to snub not only his kind and generous host, Yanis, but also more than a dozen other authors of serious commentary on both his article and Yanis’ rejoinder, all of whom he insulted with his silence. For this reason, I withhold any comment I had wished to make about the flimsy substance of his arguments.

    • As the Eurozone crisis once again rears its ugly head, the political discourse is also getting uglier. There are plenty of recriminations, especially between Germans and Greeks. Surprisingly, the two peoples have much more in common than they think. Please see my blog post at http://www.my2cents4u.com. You may also find it under the “Opinion” tab

    • Uwe, since I couldn’t find a comment section on your blog, I’ll comment here. An excellent article, to which most Greeks would agree without argument – and which Yanis has also written about in earlier articles re grasshoppers and ants in both countries. I especially appreciate your glancing analysis of German problems which otherwise – in the circumstances of German dominance – never see the light of day. To which I add one ironical detail from experience – that while Scheuble and co. terrorise Greece into opening up its closed professions, Germany continues to be Europe’s worst offender in this respect, with case after case at the European court.

      The problem in both countries, and in most liberal democracies today, is the inability – or extremely limited ability – of populations to hold their governments to account: elections every 4-5 years are insufficient for this aim, since incalculable damage can be done in a 4 year time period – damage backed up by claims of ‘mandate’. Greece has remained under the same so-called elite throughout the crisis that created the crisis in the first place (6 or 7 years now depending how you count); the one election in 2012 was skewed under the enormous pressure of the EU, IMF and Merkel / Scheuble’s illegal propaganda and threats of grexit so that the same elite scraped in yet again. One of the first things the new Samaras coalition government did was severely limit Greeks’ ability to demonstrate (ie express their preferences) – against the terms of the present constitution. My point is that the population has almost zero ability to influence events, demand transparency, let alone object to so-called policy decisions that invariably favour the ‘elites’ or Troika’s predatory aims. We have become sitting ducks.

      I’ll skip the question of non-stop propaganda…

      Finally, one of the touching ironies was that Greeks WELCOMED the idea of reform: newspaper comment threads were full of Greeks arguing for their favoured reforms – all arguing for the level playing field – for 4 years. Gradually this died out as it became clear to even the most conservative that the reforms required by Troika would do exactly nothing to actually reform the Greek state, and that ‘reform’ was a euphamism to cover looting and wealth extraction.

      We would welcome more revelations about Germany’s special status in Europe going back to post-war decisions by the Americans since what is playing out now, re the EU, Ukraine, Russia, NATO and the middle east are very much a result of this. History has become buried and fairy tales accepted, and the more you journalists really make an effort to roll back the lies the better it will be for European populations.

    • Thank you for your comments. Much appreciated. There is a comment section on the blog page itself (right underneath the blog post). You have to click on the link. Unfortunately, there is no such comment section on the Opinion site where this piece was also published. Thanks for pointing that out. With my limited technological expertise I will try to fix that. Just to note, while I am a writer, I am not a journalist, but an economist with specialization in risk management.

    • Υour post was excellent Uwe. I agree in most of your points. It makes very interesting reading, maybe you should repost it here.

    • @Elenitis
      You shouldn’t skip on the issue of the non-stop propaganda. None of us should. Unfortunately propaganda has probably managed to shape perception in both countries. Back in 2010 I was in Germany and naturally I was the focus of many questions regarding the situation in Greece. I tried to explain that for a significant part of the people this crisis represented a big opportunity for a turning point regarding its fiscal budget imbalances, its grossly inefficient bloated public sector and its near bankrupt social security. I tried to point out that many regarded the fact that the government would be put on a tight leash and forced to balance the budget a very good thing because it was obvious that previously they lacked the motivation to do so (and the abilities apparently, but that became evident very soon..). Disillusionment came quickly in 2012 with memorandum MKII and the PSI deals. It was evident that the Greek private sector was going to be hit the hardest with the internal devaluation process and the mind numbing tax hikes. Add to that the completely unnecessary PSI deals, a vulgar wave of propaganda towards the very same people that would otherwise support the much needed structural reforms, the eventual mondus vivendi the Troika struck with the Greek elites and whatever prospect of consensus from a previously willing part of the people went up in smoke. Maybe things would be different if the press in both countries managed to move past the sensationalist accusations and the stereotypes.

  4. I find the De Gaulle quote about “le guerre” quite incomprehensible. For the leader of a country that had been literally embarrassed in WW II to act so belligerent was probably part of the still ongoing propaganda campaign about France´s utter failure and, if fact, complicity – including its hatred of the Jews and collaboration with their being rounded up and of course Vichy! And on that point, the idea that the United States had to convince France “to drop its insistence that German industry be raised to the ground” also seems unrealistic: France after the war was in no position to demand ANYTHING. They were basically just beggars with their hands out to the Russia, USA and England. Everything they did receive was basically calculated charity.

    • I think that Yannis overestimates the leverage the French and the Britsh had on US policy. The only reason the Morgenthau Plan was scraped was the fact that Hull and Stimson prevailed and their viewpoint was adopted because it served US strategic plans better. What the French or the British wanted was insignificant.

    • Which is what I write in my Global Minotaur. But, you should not underestimate the extent to which, in the late 1940s, US diplomacy needed Paris’ consent in order to implement their plans for W. Europe. In that context, they offered Paris a great deal for the latter’s acceptance of a re-industrialised Germany.

    • Yes, the US plans for Europe are very well explained in you book. I agree that the French were very well compensated. In fact maybe the US should not have paid so much attention to their allies’ attempts to preserve their former status as world powers. They certainly paid a heavy price in Vietnam for supporting the French and their colonial illusions early on instead of kicking them out. Unfortunately it seems their interest in EU affairs has waned and we are stuck with the Franco-German axis of misery.

  5. “It destroyed it first by allowing the European Exchange Rate Mechanism to collapse (giving the green light to George Soros to speculate against it) and then forcing France into a savage recession (with interest rates well above what Paris would have wanted) that broke the French elites’ spirit.”

    Another day, another conspiracy theory. But then, the one about the ‘predatory loans’ is alreaday kind of old, so it’s high on time to come up with a new one.

    Wonder if you ever devise one in which the Greeks, Irish, Spaniards and so on are responsible themselves for ther deeds and ommissions which have caused the desasters for their nations. Probably because this would be no conspiracy theory which blames the Germans, it would be the sad reality.

    • Bundesbank’s actions towards the ERM and the French plans are very well documented in Bernarnd Connoly’s “The rotten heart of Europe”. Connoly was an insider at the timeand his point of view benefited from that. Give it a try.

  6. Good analysis. Generally we agree on these matters. Kastner does make some valid points in the sense that Germany alone cannot carry the Eurozone. Germany is weaker economically than generally perceived. They did game the Eurozone for their benefit, but they are standing on their head with their scorched earth policies towards the EU periphery countries. Dwindling export markets, aging population and more recently trade sanctions with Russia for supporting EU expansion into the Ukraine – another black hole for which the EU has very limited resources. The result is a double whammy where Ukraine is another destablizing weight on the EU. Contrary to Yannis, I would like a loose trade union and severe downsizing of the EU. The EU is another Holy Roman Empire – a repressive disaster drastically reducing civil liberties and economic prosperity for millions of hapless Europeans. An iron cage – as Varoufakis calls it – that is not going to change as long as Brussels exists in its present form.

    • Euro is a money without State, that is why speculation is possible with public debts interests of some countries. Unique place all over the world where this happens (Argentina did in the past the cruel mistake to believe that Washington would care about her, what didn’t happened). The Werner’s plan has been thrown out, but it was the unique solide one. That’s to say a common money zone can work in good times, but not in bad ones. The solution is simple : we need a federal state and accept our locale state members to be federated, Germany as Greece or France…Within this condition we all can resist and negociate with China or USA. Without, we cannot, and only the richest Europeans are happy with that, in all countries.

  7. I have a hard time swallowing your argument that these loans were “imposed” on poor old Greece. Sure, Germany profited the most from the periphery crisis but the Greeks were all too happy to accept those loans by lying about their debt profile (with the help of Goldman Sachs) and then squandered most of those loans. Ironically, however, by imposing myopic austerity, troika cemented a bigger crisis, the euro deflation crisis, which will haunt The eurozone for decades. As for Greece, we all know that country has spiralled into serious debt deflation, virtually ensuring it will never pay off those loans. It’s a classic catch-22 and with the ECB falling further behind the deflation curve, and a potential tidal wave of deflation coming from Asia as the yen devaluation forces others including China to devalue, it will get much worse.

    Leo Kolivakis

    Publisher of Pension Pulse blog.

    • You shouldn’t have a hard time accepting this. Think of how Ireland was pushed into accepting predatory loans in order to repay bondholdes of private banks – that the Irish state had no obligation to repay. In Greece’s case, the debts that ‘blew up’ in 2010 were public and owed primarily to the same German and French bankers (as the Irish private bank bonds). The only rational thing to do in 2010 would be for Greece to be allowed to default. But Greece was not allowed to default. Merkel told Papandreou this in no uncertain terms. Instead an ‘extend and pretend’ strategy was imposed upon the Greek government. Where you are right is that the Greek government (Mr Papakonstantimnou in particular) accepted these predatory loans enthusiastically. Which only means that the local ‘elites’ joined in the imposition of a predatory loan – a loan to an insolvent state that is bound to prolong its bankruptcy for decades.

    • The reason behind, granting of the biggest loan in the planet’s economic history to such a small and insignificant country like Greece is not solidarity. As far as solidarity is concerned just see Tim Geitner’s remarks of our European “Partners” at the time. Well, if you still believe that these remarks were angry but given lovingly, as the words of a pissed off parent to his offspring, then see Bundesbank’s TRILLION exposure (about 75) in derivatives contracts and read about the 2009 crisis transmission mechanism as exposed in “The Bankers’ New Clothes” book.
      In the context of the wild, deregulated, gigantic and complex world of finance the stakes for market players from a Greek default were way too high to let it “unfixed”. So we were “fixed”, the local elite, as well as the global, happily played along the “extent and pretend” song and the country will be in debilitating debt for eons. The “extent and pretend” song is not about future prospects and brighter days, its about digging a deep hole throwing the “problem” in and pouring tons of cement, much like radioactive waste. So, as long as the country does not default, our European “Partners” do not care if there is hunger or blood in the (Greek) streets.
      If you still believe that this is not a bona fidae analysis take a moment to reflect on other moments of European “solidarity” before the Greek economic incident, before we were pictured as lazy, profligate e.t.c. Did we ever secure our borders against Turkey? Are we still on world’s the top 10 buyer’s list (as percentage of our GDP) of arms? Have we “agreed” (See Sengen Treaty) to make our land a refugee dumping ground, in order to create a buffer zone for the rest as a free service. The irony of the matter is that we are still being schooled by them on multicultural society et. al. What about Cyprus, wasn’t it crucified and vilified by the likes of Luxembourg (see Luxleaks) as tax paradise? Do you think that Greece or Cyprus can really drill for oil within their sovereign rights? Do you think that even acting within our Troika orders to privatize anything that moves, Greece is free to sell the natural gas distribution system to a Russian or even Azerian company, even if these were the highest bidders? Do you really think that European politicians are capable of showing solidarity to exotic Greeks even when they are clusterf***ing their own people and electorate. OH PLEASE….

    • Please permit me to have a moderating influence on the tone of the discussion. I fully understand the anger, but anger does not solve anything, on the contrary. Let’s also stipulate that there is anger everywhere. That is reflected in the large gains of non-establishment parties in recent elections.

      So, let’s move beyond anger, assess the facts and evaluate the least painful solutions. And I am careful to say “least painful solutions”, because frankly all option are bad.

      First, let us agree that fiscal and macroeconomic mismanagement preceded the adoption of the euro. One very telling indication of said mismanagement was the enormous size of the so-called informal economy in many EU countries, including Italy and Greece. A large informal sector is always, always a sign for a suboptimal formal economy, meaning policy-making in that country does not meet best practice.

      Given the huge differences that existed among the countries that would later join the Eurozone made the adoption of a single currency a major challenge. Let us not waste much time on why the euro was adopted in the first place, but i venture to say it was a pre-condition for France to agree to German unification (the Bundesbank had been utterly opposed to a single currency before the end of the Cold War). But I should point out that at the time of adoption, Germans in the majority were opposed to the euro. Smaller countries at the “periphery” were much more enthusiastic. Again, let me venture to say that it was because they felt that they would be more accepted and be part of a powerful alliance of economies. Like many EU projects the euro was “oversold” to the public and in many ways the anger people feel today and the re-emergence of prejudices are partly based on the fact that they feel betrayed, whether they live in Germany, France, Greece or Italy. In a perverse way, many do not even realize that they feel betrayed by their elites.

      Now, let us stipulate for a moment that the Maastricht criteria were indeed developed in order to avoid asymmetric shocks within a monetary union, especially one with the challenges I described above. Of course, the convergence criteria should have excluded those that were not ready for the euro and might suffer from its adoption and endanger the project’s sustainability. I am sure, people will disagree with me on the purity of this argument, but let us give the policy-makers the benefit of the doubt.

      Once we do that, we realize that on the day of adoption of the euro, they had a big problem. Two of the six countries that were founding members of the European Economic Community in 1957, missed the debt/GDP target by a huge margin: Belgium and Italy. But how could there be a euro without Belgium, the center of EU bureaucracy, and Italy, one of the largest economies in the EU?

      At this point policy-makers decided to simply ignore their own criteria. The euro only made political sense to them, if as many EU countries as possible were allowed to adopt it. This was bad precedent for things to follow. It does not even matter, that the Greek government fudged the numbers to get accepted into this illustrious club (others had done the same). The Eurozone had now fudged its own rules. If it truly had followed the Maastricht criteria, only a very small group of countries would have qualified.

      But now that it had allowed for its own rules to be ignored, rules compliance with which were to overcome the lack of an optimal currency area, it would soon become clear that the Eurozone missed some major ingredients. First, the Eurozone did not have fiscal union, a major ingredient for a common currency. If the state of Alabama becomes insolvent, this would, of course, affect many of its residents. But none would lose their social security benefits, Medicare (healthcare for the elderly) and a whole host of other federal programs in the U.S. Moreover, federal taxes in the U.S. are redistributed through various programs to create a more level playing field between richer and poorer states. Nothing like this exists in Europe. Therefore, if a crisis occurs, the poor and indebted are likely to lose the little they have.

      Second, there is no freedom of labor movement in the EU. Yes, on paper there is, but cultural, language and licensing barriers prevent such flexibility that is necessary for a single currency. Only 3% of the EU workforce work outside of their own country. Again, this is entirely different from the U.S. If the state of Alabama defaulted, many residents who might lose their jobs would pack up and go to another state.

      Third, there is no banking union. That means there are no common standards of supervision and there is no joint responsibility among the sector’s participants across national borders.

      Lastly, there is no political union which is the organizing principle behind the previous three pre-conditions.

      So, marching right along. The pre-conditions for a single currency did not exist and the convergence criteria that were created to make up for this architectural defect were ignored. But times were good and everything seemed fine. Markets and rating agencies convinced themselves that the differences in creditworthiness among Eurozone members no longer existed. The euro was now a domestic currency to all and, therefore, the risk was the same everywhere. It still puzzles me, how they came to that conclusion. None of the Eurozone countries (not even mighty Germany) could print their own money and, therefore, credit quality should have mattered and that should have been reflected in interest rate differentials.

      Meanwhile, lenders had dropped all standards of prudent banking be it in real estate or happily financing the borrowing spree many Eurozone countries attracted by cheap rates.

      This takes us to the last chapter. Following the financial crisis of 2008, the global financial system nearly collapsed. Large banks in the U.S. and much of Europe were near insolvency. Once the dust settled, the heretofore ignored issues of the Eurozone’s architecture became evident.

      What to do? If a Greek politician and accountable only to Greek voters, default might have been my first thought.

      But the consequences would have been unpredictable. Other countries would do the same, the euro would break apart, banks everywhere would collapse and the Depression that had just been avoided would become reality.

      Sure, the German government had a vested interest in preventing such outcome as well, because its banking system would fall apart and it was too big to save. Of course, it is also true that a collapse of the German banking system, and then the French and eventually the U.S. was in absolutely nobody’s interest, including the Greek people.

      But politically the German government could also not sell a major bailout through debt forgiveness (which would require for the government to inject large amounts of capital into its banking system). People of all political stripes would vote them out of office, because they would either blame the imprudent borrowing of “peripheral” countries or the irresponsible lending practices of their own financial system. And again, voters would then recognize that they were sold a damaged bag of goods with the adoption of the euro.

      And so the plan that came into force was devised. And yet, as has been said by many commentators, and I agree, the plan is not sustainable and it is not wise. It will keep many countries mired in an economic depression with socially unsustainable consequences. But it will also lead to Eurozone wide deflation and economic stagnation even in Germany.

      This is then, where it gets interesting. At this point, the financial system has stabilized, much of the “peripheral” debt has been transferred from the banking system to the public sector. Therefore, debt forgiveness is much easier to manage. Once stagnation becomes chronic, even Ms Merkel might reconsider.

      She is also still resisting major infrastructure investments in Germany financed by the public sector. But lack of growth for two years or so may change her mind. She takes much pride in low German unemployment numbers, but the reforms of the beginning of the century have created low-paying mini-jobs constraining German growth.

      Infrastructure investments, on the other hand, will create, better paying jobs and they will also be an incentive to German companies, which are hoarding cash to invest themselves. All of this is good for Germany and good for Europe. But this still leaves us with a very imperfect monetary union. I really don’t see too many options. Either Germany as well as its European partners provide the necessary conditions for a functioning monetary union or an orderly dissolution must be planned.

      Let us have a discussion about, how to get there and let us forget about the injustices that people in every country of the Eurozone feel. Let us take the moral high road.

    • I cannot see how Yannis in his reply below can ignore the substantial responsibility of the Simitis goverment and Loukas Papademos for this huge mess and tragedy in Greece.

      In particular, Papademos as Governor of Bank of Greece was really negligent in the asset bubbles in the Athens Stock market and Greek real estate under his watch. He also presided over the total collapse of Greek balance of payments and huge commercial deficit that resulted from Euro entry as well as the reckless and insane levels of consumer and real estate debt. What a disastrous, irresponsible policy maker!!!!

      Needless to say his return as PM for EU purposes can only add insult to injury, yet Papademos and the Simitis economics team including the present finance minister are still revered as serious people despite all this baggage.

      I place less blame on Papaconstantinou. Jeffery Papandreou entered as PM without a clue in his head what to do. He assembled a team of his Athens College friends like Papaconstantinou, who had no experience and were totally inadequate for the challenges.

      Contrast this to Turkey and their appointing Kemal Dervis as finance minister….. Dervis vs Papaconstantinou!!! Contrast Turkish economic policies and GDP growth to Greece. EU bootstrapping was a disastrous policy. The Ukraine and their EU ‘prospects’ is a sort like looking at Greece in the mirror – small dependent country using to living on transfer money and very corrupt political elite – fertile ground for EU expansion….

      The continual inability of Greek governments to enact any coherent policies and incompetent people has always been the bane of Greece……

  8. Je ferais la guerre! – is, I think, the accurate version, completing with respect to Germany his more diplomatic response to the British claim – l’Angleterre … c’est une ile!, but with respect to Maastricht de Gaulle said nothing as he by then quite far away. My take on the French and more particularly Mitterand’s scope was that of a weak and singularly divided nation that was hoping to harness herself to the German chariot in order not to end up as a straggler. Like in Vichy days, France wished for Germany to save France from inflation and the French left, German reunification being the smaller price. That profound, almost religious division of France against herself, can be measured by the later assertion of the French governor of the European Central Bank, that he, Jean-Claude Trichet, had beaten the Bundesbank in the fight against inflation – while his own sacred country had unemployment of the order of 10%. To keep to the Versailles parable, it appears that in the event it was the French who imposed the punishment to a defeated enemy on their own selves, or as it was said at the time of the infamous Treaty, they were hoist in their own petard.

  9. I really don’t think, Yanis, that you and Klaus are on different pages. As far as I can tell, Klaus is not suggesting that Maastricht was another Versailles for Germany, but that Germans perceive it that way. Big difference. And it is only now that they perceive it that way. It is a revisionist sense of history. Germans have convinced themselves that they are being victimized. Nothing could be further from the truth, but it is this delusion that drives their policies, which have broad popular support. The French did insist on the euro as the admission ticket for German unification, but Germany dictated the terms of the monetary union. And all the rest that you describe is right on the money. But for Germans “perception” has become reality. They are the poor victims of irresponsible policies in the periphery (including France).

    • Quite ok with you Uwe, when I am french and very interested in european institutional and economical problems. The right solution was the Werner’s plan o 1971, that’s to say fiscal, budget and monetary union. Or, more simply, political federal union.

      But the key point is, in France, that the Vth republic was build up as a perfect cloth for De Gaulle, the President who talked about his own fellow citizens as “calfs”. It’s a very centralised power, a sort of republican kingdom, far from the fundamental law of Germany in its Constitution. perhaps will we see the end of a very bad joke between Paris and other french Regions, in wihich both a centralised administration and a locally elected power coexist with a cruel lack of effectiveness : costly and unefficient. Here, just remember that since 1789, the French people is far to understand how Paris works with its high schools elites, so close to 200 dominant families, owners of the largest part of France’s patrimony. Inequalities were low because of reconstruction after WW2 till 1970′ and and rised up severly since, like in Italy. Add to this the marvellous idea of french governments to become a services country within the dogma of competitive specialization of the economists mainstream, and you understand why we got so huge problems whith our paiements balance.

      Euro is for nothing in what happens now, in Greece, Spain, Portugal, Ireland, Italy, France, aso. even Germany realises that when the customers die, the furnisher will die too. All public opinions are stressed and have to understand that EU IS NOT A DEMOCRACY, but a club of 28 heads of governments never ready to find out strong common policies. We have peace, but poverty for all common citizens, even Hartz4 german workers. What do we do with the gift of european citizenship ? Nothing. 95% of european citizens have a common interest : to replace EU’s club (European Council and European union Council) by a true parliamentary federal regime, simple, clear and efficient.

      Without this, as told by someone here, we all take a severe penalty for decades. Juncker’s plan is a bad joke. EU gives nothing except warranties to shareolders and private investors about their highest Return On Equity.

  10. Excelent response. As usual spot-on. I also enjoyed the last bits about a rational Europe and a virtuous Greek government, you have a fine sense of irony. On another note, one can’t help but marvel at the great track record the French have vs Germany these past decades. I blame their ineptitude when it comes to the euro-mess, in the end the Germans are transparent in promoting their interests, hell as it seems from Klaus’s post they even managed to turn French self-delusions into their propaganda. I am really impressed.

  11. To me it is obvious that you’re right and they’re wrong, Yanni – as simply as that – although I do have some doubts on some other positions for which you argue from time to time. A country which accepts its own role as a leader does not behave like a neocolonial opportunist. This is exactly what Keynes deplored in the Versailles treaty and this is also what happens now.

    • That is right. It has no sense to speek about periphery and centre. What is true, nailed by Uwe, is that AfD fears CDU. A nazi deputee has been elected on may 2014…Most of journalists, in all countries, are more paper vendors that fine experts of EU institutions. It’s always easier to sell instinctive fears than long explanations about an historical long chapters of failures in european political construction.

      Perhaps Yani does think that Merkoland still exists. It doesn’t : the french-german engine is broken, definitely, since 2004 and the massive enlargment. The sole solution is solidarity between all european citizens to enforce their own governments to look reality in face. They cannot manage the crisis and financial risks, which aren’t dead at all, from their capitals neither with the unefficient EU tool. The recovery pilot we all need is a true State, also able to deal with China and USA on the same level. EU is all except that.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s