♠ Posted by Emmanuel in Credit Crisis,Europe
at 2/15/2012 06:12:00 AM
My oh my. There appears to be some sort of competition going on among journalists to make the most outlandish analogy between what's going on with Greece in the EU and a historical European moment best forgotten. A few weeks ago we had the FT's Wolfgang Munchau likening events in today's Europe to the Thirty Years' War--in part a religious conflict between Catholic and Protestant faiths. Now we have CNN business and travel journalist Richard Quest saying that the conditions being imposed on Greece are alike those of the Treaty of Versailles [!] Which, of course, imposed such heavy burdens on Germany that they led to hyperinflation to pay off war debts, the rise of the Nazi party, re-militarization to avenge perceived, slights and the outbreak of WWII.He first sets the scene for Greek economic capitulation:
It is official. The Greek economy has gone into meltdown. The numbers released Tuesday show that during 2011 the economy contracted by 7%. Barclays estimates that much of that loss came in the last three months – when the economy dropped a whopping 5.1%.Then we get to the harshness of the prescriptions akin to those of Germany in 1919--albeit with Germany now going into the imposition business:
A look at the IMF's World Economic Outlook puts it into context. In the darkest days of the recession no other developed country came close to suffering such a large loss (U.S. -2.4%; UK -4.9%; Eurozone -4.1). It is now clear Greece's economy has fallen off a cliff. It has endured five years of grueling recession and every prospect of much more to come, as even the Greek prime minister warned that things would be tough for years to come.
If Greece sinks into riot and rebellion, will we look back on this time as being an error in history because, even for understandable reasons, the Europeans pushed too hard?For all that, Martin Wolf notes how major political parties in Greece remain all for staying in the EMU. But, for how much longer if popular sentiment turns even worse with such violent images being transmitted throughout the world day in and day out? Perhaps Richard is on to something here even if belligerent nationalism by the Greeks is not really something to fear at the moment. After all, Germany pre-WWII was complemented by a mighty industrial machine, whereas Greece in this day and age would appreciate (export-led) industry of any scale.
Comparisons can be made with the Versailles Treaty and the way Germany was treated after World War I. Hefty reparations and a humiliating defeat were heaped on the country. It all ultimately led to such resentment and anger that the seeds were sewn for the nationalism which followed. In Greece's case there are the years of debt burden on future generations, the humiliation of making elected politicians sign pledges to other European governments and ultimately the destruction of a way of life (albeit unsustainable) that is precious. I don't think I can push the analogy much further though. Greece hasn't had territorial appropriations or restrictions on its military.
But the point remains. What some in Greece are calling the "German boot" on their throat is stoking up a level of nationalist fervor and resentment that, if not careful, the Europeans may literally push too far.
