In the past two weeks, politicians and media in Germany have likewise perpetuated the idea that helping somebody who is over-indebted (aka PIIGS) is only possible by giving them another credit. The majority of the population shook their head in disbelieve. And was bashed because of this.
Now, finally, Deutsche Bank boss Ackermann and former Bundesbank boss Pöhl spoke their minds. And told us, they didn’t believe Greece would be able to pay back their debts. If this flash of genius had been spoken openly a week ago, it might have made all the differece between facing an inflation and actually helping those countries that are in heavy debt.
Indeed, politics has been completely oblivious to the problems of some (if not all) Euro-zone countries. Let’s face the facts:
Countries that want to become a member of the monetary union must have a maximum budget deficit of 3% of the GDP. Germany which is complaining now, did not fulfill these criteria itself and worked its way around the problem by regrouping stocks of their own public enterprises.
The deficits of the Euro-zone countries have been published every year in the media, thus following art. 109c para. 1 of the Maastricht Treaty (Deutsche Version). These announcements just didn’t get much attention.
Countries, who didn’t fulfill the criteria didn’t have to face any consequences except for a five-minute attention every year. (Germany is by the way one of the countries that was scolded.) The monetary fines that are part of the contract seemingly have never been collected. It obviously needed some US rating agencies to tell our politicians that something went wrong …
What is now promoted as the only way out of a financial crisis that didn’t seem to exist last month, is in fact against art. 21 of the “Protocol on the Statute of the European System of Central Banks and of the European Central Bank” of the Maastricht Treaty (usually known as “no bailout”) This article has been there for a reason, which is to ensure the stability on out monetary system.
Which brings me back to where I started from: If everybody in charge has known this, and has known this for years, why are we trying to close the barn door after the horse has escaped? Didn’t we have plenty of time before?