Germany is overplaying its hand, not for the first time in its turbulent history, and will start to pay a price. Like a calvinist pastor it lectures on the morality of sticking to agreements, paying debts and reforming wayward habits. Very good as a lecture or a sermon. But nonsense when it flies in the face of the two critical pillars of capitalism and democracy.
The foundation of capitalism is that businesses, individuals and countries can fail and go bust if they borrow more than they can manage and repay. This is an essential discipline that acts as a restraint upon borrowers and lenders since both lose in the event of failure. The pillar of democracy is that governments can agree to anything they like but if they do and its becomes such a burden upon the people that they can no longer accept it, the people will throw out the government and all its works.
Both of these things have happened in Greece. Berlin and under its orders, Brussels, say that Greek people can vote for whatever they like but that does not change what their predecessor governments agreed to. This is a denial of democracy, because the Greek election outcome changes everything. Even if the new government could be browbeaten into accepting Germany’s terms it would return to Athens convulsed in uproar on the streets, which would lead to its overthrow and replacement with something wholly unwilling to agree to anything which would avoid default.
This blog will not dare to predict how today’s talks will end. What it can record is that Europe now has three problems in which its record is littered with ill judgement and mistakes. Russia, Greece and the Euro. None of it looks good. And there is a fourth. Britain could be on the road out.