At the heart of the constant bailout bickering in Europe is a fundamental, but seriously misguided notion that a battle is underway between the virtuous and fiscally responsible Germans and the irresponsible Greeks, Spaniards, and Portuguese.
In this incorrect view, the Spaniards have begun to see the light, but the Greeks need a serious lesson in morality.
If we steps back and actually assign blame, we can find plenty of blame to go around.
“Speece” (my term for the Southern eurozone deficit countries of Spain, Greece, Portugal etc.) made many mistakes, but so did Germany.
It’s logically impossible to believe “Speece” was a horrendously imprudent borrower, while simultaneously holding the view that Germany was a prudent lender.
More importantly, neither imprudent borrowing nor imprudent lending is at the heart of the eurozone problem. Continue reading