The eurozone crisis: a German point of view
- 30 September 2011
- From the section Economy
Reading the British or American press these days, the villains of the euro crisis are easy to spot: Germany and the European Central Bank (ECB).
If only they would stop holding the single currency to ransom, say the armchair strategists, get with the programme, and write a blank cheque for the euro, that will finally silence the markets' fears.
Then, so the argument runs, the crisis will be over, and that cheque might never be cashed.
Who will pay?
But spending a few days in Germany this week, I've been reminded that there is another side of the story, and it isn't just that the German people would rather not fork out cash for distant neighbours (though that is true too).
The way many German officials see it, they are playing the conscience of the eurozone.
They are the ones asking who, ultimately, will stand behind these grand promises, and when, exactly, elected governments are going to get a chance to have their say.
That is why Chancellor Merkel and her finance minister repeated, again and again, this week that they would reform the eurozone "one step at a time".
It's not just a practical necessity - in their view - it is also a moral one.
On this line of reasoning, the future of the eurozone shouldn't be decided at gunpoint, under pressure from the financial markets - or foreigners like the US Treasury Secretary, Tim Geithner, who seem to think you write the cheque first, and ask questions after.
Two hundred years
Mr Geithner says that the lesson of 2008, and nearly every other financial crisis, is that the slower you react, the more it costs you in the end.
He is almost certainly right.
But, as some in Berlin would add, didn't the US have its own problems, getting the TARP programme passed by Congress, in October 2008?
And the TARP didn't require them to re-write the US Constitution. If it had, it would never have happened.
The last constitutional amendment to be ratified by all 50 US states was about Congressional pay.
This 27th Amendment became law in 1992, more than 200 years after it was first passed by Congress and submitted to the states.
Chancellor Merkel isn't asking for 200 years (we hope). But as I point out in my piece for the Thursday TV bulletins, even the response to the crisis we have seen so far has taken the eurozone many steps towards a fiscal union, without much of a democratic debate.
We see these steps with the development of the EFSF, but also, and less transparently, in the many interventions by the ECB, whose balance sheet has become, in effect, a stalking horse for a common eurobond.
If the ECB loses its shirt in the Greek bailout - or its purchases of Spanish and Italian debt - it is eurozone taxpayers collectively who will pay, whether they feel collective or not.
Outsiders want them now to integrate faster, to resolve the crisis - even eurosceptics, like George Osborne, who would never in a million years want the UK to be included.
But the faster they move, the less legitimate that union may be in the eyes of voters, especially German ones, who understandably fear that in a fiscal union, we will see the same problems crop up again and again.
You may not share the German desire to punish unwise investors and profligate governments - so that others do not do the same.
You might think it hopelessly backward to want to respond to a financial crisis "one step at a time".
But with the future of Europe at stake, it's not the most unreasonable thing in the world to want to take it slow.
A pity the financial markets don't take the same view.