The Germans and the rest of the world

The big powers currently find themselves in agreement that what the world needs right now is growth-inducing measures.

That is everybody except for Germany.

Washington has been following a strategy of growth for some time now, while continuing to exert pressure on Berlin, in hopes of persuading the latter to ease up on its demands for austerity and instead to start promoting growth.

Tokyo appears to be heading in the same direction as the United States, while Beijing is also on the same team.

We should all be hoping for the Japanese experiment to prove successful and, in combination with the encouragement from Washington, help persuade the Germans that their obsession with fiscal discipline cannot venture beyond certain boundaries.

Nevertheless, there are two major problems here, issues which render the idea of nurturing great expectations regarding Berlin’s strategy completely unfounded.

The first impossible-to-overcome obstacle concerns the German general elections which are scheduled to take place in September.

It would be particularly difficult, if not outright impossible, for German Chancellor Angela Merkel to adopt a new position before her fellow Germans go to the ballot boxes. She would be risking her re-election, which at this point in time appears certain.

The second hurdle has to do with the German establishment’s obsession with complete fiscal discipline, an obsession that resembles that regarding the gold standard in the 1920s.

Given that the German state machine is neither known for its flexibility of thought nor for the speed at which decisions are taken, no one really knows how long it will take, in the aftermath of the elections, for Merkel to change course.

The question is for how long Greece, along with the other Southern European countries, will manage to endure the current situation.

The Greek government is optimistic that following the German elections and provided that the country is relatively up to speed with its commitments, there will either be a haircut on the country’s official debt or those famous eurobonds will eventually be issued.

No one knows whether Merkel has suggested to Prime Minister Antonis Samaras that things could move in that direction, but such expectations persist. There are also those who keep wondering why the Germans couldn’t bring the election date forward and allow everyone, including themselves, to take a deep breath.

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