We take our tourist trip lightly. But Europe is roiling with unrest. We are in Berlin, and see the French flag flying outside the parliament: a signal that Sarkozy is here too, meeting with Merkel to determine the response of the largest economies to the woes of Greece and others. Some are predicting that by the end of the year there will be no Eurozone. Now this morning we watch the news. The Euro debt story reigns. I realize that if the Greek banks collapse, many Germans may lose money, perhaps because they are the ones that have funded the debt. The German and French leaders are being squeezed by domestic politics to play hard ball with the Greeks; a severe contraction of Greek public spending also puts the Greek economy on the skids, and makes reform of an inefficient public service (payroll tax is not yet computerised) that much more difficult. Street demonstrations and strikes are everywhere in Greece. The day we passed through Athens, the air traffic controllers were on a work-to-rule, which delayed our flight from Samos.
The German newspapers I see on the newsstands all lead with the story. German newspapers are much more serious than ours – not consumed by a full page picture and a huge banner headline. I purchase a copy of Die Welt at the Hauptbahnhof as we leave only partly to practice my very rusty German. There is a ‘troika’ of experts from the IMF, the European Commission and the European Central Bank who apparently have the future of Greece in their hands: much depends on their report (about how far the reforms have gone) whether Greece will get it’s next tranche (slice) of €8 billion of funding, due 24 October. I suspect that there is political bluster. Economist Von Weizsacker of Koln University, a Keynesian, believes that Europe is marching in the wrong direction. He criticizes Chancellor Merkel, a conservative, who backs the Euro but whose brinkmanship seems a familiar refrain. It seems to be a question, as in America, of stimulus or restraint. On the one hand, the Chancellor is backing the Euro. “If the Euro falls, then so does Europe.” But on the other hand, she appears unwilling to underwrite a general European stimulus. Nor do other European countries. The distinguished professor says that if Greece defaults, then that would not be the end of Europe – a fear being generally expressed, it seems. He believes that the “European Project” still has value. He says that Of course individual states should reduce debt, including Germany too. The question is not whether Germany is being too selfish, but whether it should use its economic muscle to back the weaker nations for a stronger Europe. And there isn’t much time. Strengthening the total European balance of payments would assist both Europe and America. To reduce (German) debt to zero is not practical, according to the professor. The debates of Europe seem to mirror those of America. The devaluing of currencies concerns everyone, and joblessness too. The Mediterranean rate of youth joblessness – up to 50% – is very destabilizing. But so is domestic anxiety in Germany if the value of the Euro falls too low.
The joke on the next page of the newspaper is this: there’s a sale on of Mediterranean wine. Today you can get a bottle for €4. Don’t buy today! Tomorrow it will be specialled two for €3!
Perspectives 