I can’t help of thinking of events in the 1930s when I see the headlines in the financial media these days. One thing is the geopolitical situation – another thing is the new Greek government’s attempt to negotiate a new debt deal with the EU.
To me it is striking to what extent the economic and political situation in Greece resembles that of Germany in the early 1930s. And similar the position of Germany today – both that of the German media and of the German government is very similar to the French position in the early 1930s.
In 1931 the German economy was in a deep crisis with deflation and ever mounting debt – both public and private. A rigid monetary regime – the gold standard – was strangulating the German economy – while extremist parties on the left and right became increasingly popular among voters. At the same time the position of French government was uncompromising – Germany’s problems is of her own making. The answer was more austerity and there could be no talk of a new debt deal for Germany. Nobody seemed to think there was a monetary solution.
I therefore think we can learn a lot from studying events in the early 1930s if we want to find solutions for the euro zone crisis and it might be particularly suiting for the German newspapers to take a look at what they themselves were writing in early 1930s about the French position and then compare that with what today is written in Greek newspapers about the German position today.
Or compare what the French media was saying about Germany in 1931. Just take a look at this quote:
(The French newspaper) L’Intransigeant describes Germany‘s financial methods as frankly dishonest bankruptcy. “In 1923,” it states, “Germany reduced the national debt to nothing, then borrowed abroad on short terms credit which was invested on long terms, and is thus unable to repay her creditors. Now the enriched country merely declares it is insolvent and spits on Its victims.”
I am pretty sure I could find a similar quote in the Bild Zeitung today about Greece.
I encourage my readers to have a look at the newspaper achieves from 1931 to find similarities with the situation today in regard to the relationship between France and German in 1931 and Germany and Greece today. I will be happy to publish your findings (drop me a mail at lacsen@gmail.com).
The Market Monetarist 
samo794
/ February 13, 2015You’re very right, although I doubt of monetary solution. Even such a progressive country like Germany cannot work if the burden of debt is too heavy. And there are no Daimler or Porsche or Benz in Greece today. Greece people are suffering and Germany has no benefit of that. There is no any reason to continue as it is.
Germany has to decide whether it let Greece to live out of Euro and go bankrupt OR eurozone is going to change to fiscal and transfer union as is USA and we will travel to summer holiday to Greece as before and meet there happy Greeks. The transformation of Greece from oligarchy to rule of law takes one generation at least and it can be done by Greeks themselves only.
bart
/ March 5, 2015It’s wrong to think of Greece as a country, in the economical context. It’s a city-sized economy, with a city-sized population and external currency. It’s basically a slightly bigger Detroit (metro area). Do you really think the solution to Detroit problems is a different monetary policy, rather than reforms to make it productive?