Michael Lewis on Germany and the Europocalypse

Michael "Big Short" Lewis continues his tour of the imploding Eurozone (previously: Ireland) with a stop in Germany, who hold all the cards in the European financial crisis. As always, Lewis is lucid, persuasive, entertaining and controversial. It's a long piece, but well, well worth the time.

The deputy finance minister further disturbs my wild assumptions about him by speaking clearly, even recklessly, about subjects most finance ministers believe it is their job to obscure. He offers up, without much prompting, that he has just finished reading the latest unpublished report by I.M.F. investigators on the progress made by the Greek government in reforming itself.

“They have not sufficiently implemented the measures they have promised to implement,” he says simply. “And they have a massive problem still with revenue collection. Not with the tax law itself. It’s the collection which needs to be overhauled.”

Greeks are still refusing to pay their taxes, in other words. But it is only one of many Greek sins. “They are also having a problem with the structural reform. Their labor market is changing—but not as fast as it needs to,” he continues. “Due to the developments in the last 10 years, a similar job in Germany pays 55,000 euros. In Greece it is 70,000.” To get around pay restraints in the calendar year the Greek government simply paid employees a 13th and even 14th monthly salary—months that didn’t exist. “There needs to be a change of the relationship between people and the government,” he continues. “It is not a task that can be done in three months. You need time.” He couldn’t put it more bluntly: if the Greeks and the Germans are to coexist in a currency union, the Greeks need to change who they are.

It’s the Economy, Dummkopf! (via Super Punch)

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• [YamaraTheGod]

  if the Greeks and the Germans are to coexist in a currency union, the Greeks need to change who they are.

  Back when the Concert of Europe helped pry Greece away from the Ottoman Empire, they noticed that an independent Greece had a hard time repaying its debts.

  So they put a German prince in there as king.

  Nothing changed then.

  Nothing has changed since.

• [Listener43]

  There is no “Europe,” there are only European nations pretending they’re Europe. (Apart from the fantasies of the bureaucrats in Brussels, that is.)

  • [JT Montreal]

    There is no “France,” there are only Provinces pretending they’re France. (Apart from the fantasies of the bureaucrats in Paris, that is.)

    There is no “Germany, ” there are only Länder pretending they’re Germany. (Apart from the fantasies of the bureaucrats in Berlin, that is.)

    Belgium? Flemish and Walloons. Swiss? Has French, German, and Italian speakers (Oh, and Romansh.)  Italy? Unified in 1861. (Thank you, Wikipedia!)  Russia!  China!  India!

    I’m in a City where people identify themselves as Canadian or Quebecois, occasionally both. Sometimes neither.

    You could say your line about almost any modern state, cobbled together sometimes by necessity, sometimes by force – look up the history of Germany after the Holy Roman Empire and before Napoleon.  The idea of a nation comprising both Prussia and Bavaria seemed preposterous at times.

    It generally takes a few generations for such unions to stop feeling awkward.  This current bureaucratic dream or nightmare has not yet had that adjustment period.  If it makes it through the next few decades, it’ll be stronger but cohesion is by no means guaranteed. (Yugoslavia?  Czechoslovakia?)

    • [PJDK]

      Right on the nail as far as Belgium is concerned incidentally.

      Your point is true, but the real question is how good are they at pretending.  Also languages, mostly languages.

    • [retepslluerb]

      Actually, not even all Länder are uniform bodies – Franken, for example, it part of Bavaria, but quite distinct from the Bavarian mainstream.

      North-Rhine Westphalia has quite a few distinct groups, far beyond the “rural/city”-divide.

      Frisia is part of Lower Saxony.

      And of course, there are ethnic Sorbs and Danes with their own communities, who have been Germans for centuries.

      Of course there is such a thing as “European” and it is more or less well understood, down to curious effects like Israelis being understood to be honorary Europeans and Turks being on the edge.  (They have the wrong religion, y’know.)

• [SerfCity]

  Good Luck with that since the Greeks aren’t going to change as they don’t want to and now that they found someone to subsidize their intransigence they will cling to the status quo until it’s pulled away from them.  I’m not saying Greeks are incapable of change, progress, economic success etc but their system is built to defeat those goals due to an entrenched bureaucracy and electorate that is enriched by the current system of stifling new businesses and occupations.   The Germans will get fed up with the Greek rent seeking mentality and pull the Euro out from underneath them as a lesson to Italy, Spain, and Portugal.  

• [GreenJello]

  This article makes me ashamed to be an American.  The idea that our banking industry did everything in it’s power to rip off German banks, and the hard working German people to give million dollar bonuses to greed people who didn’t need them is bad.  The fact that it’s so well known that Vanity Fair is running an article about it is worse.  The fact that nobody has gone to jail is completely shameful, and a failing of the American people and our institutions.

  • [ChicagoD]

    Yes, the poor, unsophisticated Germans, wholly unequipped for our modern world. Sheesh.

• [Ben Burger]

  The Idea of the IMF bugs me

• [jtegnell]

  But but but I thought not paying taxes was good for a country!

  Is FOX News lying to me then? How can this be?!

• [maruja_de_lujo]

  “…the Greek government
  simply paid employees a 13th and even 14th monthly salary—months that
  didn’t exist. “
  Maybe that’s a sin in US American eyes, but 14 pay packets per year is considered standard for a decent, full-time job here in Spain, and has been since the late sixties. They extra pay comes in summertime and Christmas time, to cover the extra costs that families tend to incur then. In Australia, where I grew up, there’s a similar concept called holiday loading. To frame it as an underhand trick “To get around pay restraints” is disingenuous and shows a strong ideological bent on the author’s part.

  • [toyg]

    Exactly, same in Italy. It’s simply what “civilized” (i.e. turbocapitalist anglo-saxon) countries call a “guaranteed bonus” on a yearly basis. It doesnt’ get around anything, it’s taxed like regular income and gets included in all figures about average salary.

    Besides, this idea that pay restraint is essential for economic recovery is, quite frankly, ridiculous. Investment is essential; a stable framework of employment laws striking a good balance between workers’ rights and employers’ interest is essential. Low inflation is helpful. Pay restraint is essential only to exploit your workers, and that’s it; it depresses internal demand (which is _really_ essential in any western country), it reduces social mobility, removes incentives to innovate and increase productivity, etc etc etc…

  • [Maria Martin]

    Same in Germany. You normaly get a 13th month salary or christmas money in full-time jobs. Funny that the author of the article never mentioned that…

    And this national character stuff? Would this be a good time to point to all the “f*cks” and “f*cking” I hear so often from Americans?

    • [retepslluerb]

      A 13 month salary or holiday money has been become rare – I haven’t heard from *any* job offer in recent years  (that wasn’t related to public works, and even then not often) that had that. It’s nearly all 12 month, 40 hours/week (sometimes 42) and you have to insist on 28 days of paid vacation.

    • [Antinous / Moderator]

      And this national character stuff?

      “National character” is a scientific fact. You can easily verify it using phrenology.

• [Taz]

  Some of you (those not bent towards supporting the UK-US war against the Euro) might enjoy some counter-analysis and debunking:

  http://blogs.reuters.com/felix-salmon/2011/08/14/feces-fascists-and-michael-lewis/