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Taking responsibility

June 30, 2012

Paul Krugman at NYTimes is upset that nobody wants to take responsibility and end the financial crisis. The article is mostly written against the Federal Reserve, whose actions I know next to nothing about and so won’t comment on. But Krugman starts with claiming that the German government is refusing to take responsibility for ending the Euro crisis. And this I very much take issue with.

Merkel & Co. have different ideas on what ought to be done than Krugman. That still doesn’t mean that Germany is “abdicating” its responsibilities (as Krugman puts it). Actually, it’s debatable whether Germany and the other financially healthy Euro countries are to be responsible for Spain and Greece at all. The original agreement to have a common currency explicitly stated that no country should have to pay the debts of another country, much less the debts of another country’s banks. Still, that’s exactly what Krugman demands. That Germany bail out the Spanish banks. Since Merkel opted to bail out the country of Spain instead, Krugman claims that the German government is not taking responsibility.

He compares the current financial crisis to the start of the Great Depression, where the precipitating cause was a bank crisis in Austria 1931. Stronger European governments could have prevented it then and could prevent the worst now, he claims. Krugman is seriously asking for a “strong government” in Germany. Am I the only one who gets the shivers from that phrase?
Meanwhile in Germany, the government would like nothing more than to act strongly. However, they have multiple times been sued in the Constitutional Court for trying to bypass democratic procedures and safeguards. Ever heard about that democracy thing? All power coming from the people? Yeah, the people of Germany are not very interested in throwing money into the twin black holes of Greek and Spanish finances. If a public vote had been held, no bailout money at all would have been awarded. And I have a feeling that the “don’t give them any money”-vote would have come in at more than 80%. It’s a miracle (or a scandal, depending on your preferences) that our government has achieved what it has.

I find it a serious insult to claim that Germany is doing nothing to solve the crisis. He can claim we’re doing the wrong thing all he wants, but not that we’re not taking responsibility. That’s my tax money that Chancellor Merkel promised to Spain. Without my permission. If that’s not being a strong government and trying to solve the crisis, I don’t know what it is.

Taking responsibility: it does not mean what Krugman thinks it means.

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