Germany says ‘nein’ to rescuing Greece

Stephen Beard Mar 10, 2010

Germany says ‘nein’ to rescuing Greece

Stephen Beard Mar 10, 2010


Kai Ryssdal: When last we heard from our man in Europe, Stephen Beard, that’d be yesterday, he was in Athens, giving us the street level view of the Greek debt crisis. And how people there are none too wild about new emergency budget cuts or restrictions that might come along with a rescue package from the European Union.

Stephen is back today with the second part of the story in which we hear how Europe’s biggest and richest economy — Germany — isn’t all that crazy about a rescue either.

STEPHEN BEARD: I’m on Unter Den Linden, the wide, elegant boulevard that runs through the center of Berlin. This is more than a 1,000 miles north of Athens. And a very different world. It’s very cold here today. In fact freezing. And there’s not much warmth or affection for the Greeks either.

Kick them out of the EU. Yes, kick them out says this cab driver.

He says: My father used to say a good gardener needs a hard heart and a sharp axe. Yes, cut the Greeks out. It’s that simple. What’s the problem?

The Einstein Coffee House, a few yards further along the road. This is a famous watering hole for politicians and commentators. Here there’s also a marked lack of sympathy for the Greeks’ predicament.

HEINZ SHULTE: When they joined the euro club we thought the Greeks understood the rules and played by them. But they didn’t. They fiddled the statistics. And that is something that the Germans don’t like.

Analyst Heinz Shulte says most Germans are appalled that Greek governments covertly borrowed four times the limit allowed under those euro club rules. And they’re not happy the Greeks buckled under the monetary discipline and then harped on Germany’s Nazi past.

SHULTE: Sorry. We didn’t storm-troop them into the euro. They wanted it. And they should have read the rules.

Germans say they have every reason to be furious with the Greeks and finicky about financial rules.

The movie “Cabaret” was set in Berlin in the early 1930s during the Weimar Republic.

Rampant inflation helped fuel the rise of the Nazis. That fact has been burned into the German soul. But, say the Greeks, on the subject of the Nazis: How about paying us some more war reparations!

We’ve already paid, and paid and paid again says Matthias Warnecke of Germany’s Taxpayers’ Association.

MATTHIAS WARNECKE: German taxpayers pay the biggest share into the European budget from which Greece is getting a lot of money. I think we have helped Greece a lot.

To the tune of around $50 billion.

The Greeks claim they’re not seeking financial aid from Germany. Just moral support. But few doubt that if Greece comes close to default, cash will be needed to save them. OK, says Warnecke, as long as it’s not our cash.

WARNECKE: Well it’s pretty obvious that German taxpayers are not responsible for a rather careless fiscal policy in Greece.

Nevertheless there are some analysts here who say German taxpayers may well wind up footing the bill. Put simply, they argue, Germany can’t afford to stand back and watch the Greeks go bust.

ANSGAR BELKE: You can be sure that Germany would jump in at least with guarantees because German banks’ interests are at stake at the moment.

Ansgar Belke of the German Institute for Economic Research says German banks have lent billions to southern European countries and are very afraid.

BELKE: If Greece falls also Spain would be heavily damaged, and our banks are even more involved in Spain than in Greece.

German banks are believed to have lent more than half-a-trillion dollars to other vulnerable eurozone countries. If these economies crash, the euro could collapse. There would be turmoil in one of Germany’s most important markets. If push come to shove, says Belke, after much huffing and puffing about moral hazard, the Germans would probably pay up.

In Berlin, this is Stephen Beard for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.