The always-worth-listening-to Planet Money has been even more worth a listen of late, as they are diligently reporting from Berlin on the German reaction to the potential bailout of Europe’s delinquents. And not just the what…they’re doing a good job on the why, as well.
When you consider one of the over-arching narratives of Europe since 1945 has been the rest of the continent finding ways to tie Germany’s fate to their own – for economic gain and for, let’s say ”preventative” diplomacy – and the Germans pretty much rolling with it (an understandable tradeoff, as West Germans received a fairly quick welcome back into the Western community as attention turned to the USSR), that these events have the ability to upset the apple cart that has been so finely balanced for over 60 years should give everyone pause.
Simply put, for the European Central Bank to do what it feels is necessary to save the Euro, it will have to go against the rules the Germans demanded be put in place as a condition for their joining the Eurozone. These rules – primarily focusing on airtight monetary policy – reflect the mortal German fear of inflation. This is a fair phobia to have when your nation has experienced the worst hyperinflation in human history and people were using wheelbarrows of Deutschmarks to buy a loaf of bread (or just setting them on fire. Really.)
This conflict has led to the top German official resigning from the ECB. And polling would indicate the public empathizes with him. Whichever way it ultimately resolves itself, the rest of Europe could end up in the situation they’ve spent decades bending over backward to avoid – completely reliant on a Germany that holds all the cards.