How cosmopolitan should Germany be?
Here is one report:
There may be a crisis in the eurozone, but the shopkeepers and stallholders on German streets are expecting another bumper season. The financial markets are in disarray, but consumer confidence in Germany is up.
Total unemployment is at a 20-year low. Here is another report:
…the Munich-based Ifo institute reported restrictions faced by German businesses in obtaining credit had relaxed this month – despite the weaknesses across much of the eurozone banking system.
The percentage of companies complaining about restrictive credit policies fell from 23.1 per cent in October to 22.4 per cent in November – one of the lowest figures recorded since the survey started in 2003, according to Ifo.
It’s fine to assert that a bigger and badder eurozone crisis will crush the German economy, and maybe it will, with reasonable probability I would say. But a lot of the Germans don’t think so, and I see a lot of — I’ll call it moralizing rather than wishful thinking — unjustified claims about this topic, every day now. Germany is selling more and more to developing nations. And if the euro evolves into a northern European currency it will be stronger but that is unlikely to destroy German exports. Switzerland is struggling in export markets, but for a long time they have succeeded with a strong safe haven currency. Germany has had a stronger currency in the past and they did well before the eurozone, believe it or not. Germany might rather have “the Swiss problem” than co-write loans to Italy. They just need to survive the transition. Keep in mind that, unlike with a TARP to U.S. banks, there are no realistic conditions under which Germany can simply foreclose on the fine nation of Garibaldi and Cavour.
Everyone is saying Germany should do the cosmopolitan thing and underwrite the weaker countries. I am a cosmopolitan but I have questions. Are those people consistent cosmopolitans? What should the United States be doing today for other countries? For Mexican immigrants (as opposed to American bondholders to Mexico)? For China? Are we doing it? Are you advocating it? I don’t see it. What are we doing for Mali? That’s real suffering, yet we ignore it without much guilt. Should we feel worse, if we had written and ratified a treaty specifying that we are not obliged to bail out Mali?
Here is one recent report about the plan the EU has in mind; we will see soon enough. Here is evidence that some kind of big plan — or at least a plan for a plan — is coming soon.