The Liberty Opinion: Germany’s Role in the Euro Crisis

Chancellor Merkel Should Stop Austerity Measures And Greece Should Strive For Independence

In July, Greece decided to accept austerity measures that were the conditions for receiving additional aide from the European Union. Despite the enormous opposition in the last national referendum against measures such as raising taxes and cuts in pension, Prime Minister Alexis Tsipras decided to accept the demands in order to stay in the currency union. Greece is undergoing an increasingly serious financial crisis, one reason being the rise in pension recipients due to early retirement. Pension reductions have occurred in the past, but is expected to see further cuts.

 

Greek Citizens Ought To Aim For Economic Independence

This, however, will only serve to postpone the problem. The root of the problem lies in the lack of a strong work ethic to create their own wealth and bring abundance to their country. German Chancellor Angela Merkel has continually advocated for austerity measures against Greece, but this will not solve the root of the problem either. If Greece undergoes further austerity measures and tax increases, they will experience a serious recession and mass unemployment. The unemployment rate among young people is already over 50%.

For Greece to create employment through government expenditures, despite its inability to repay its debt, may seem like a breach of rules from Germany’s perspective. However, current methods will not bring about sustained employment or wealth. Germany needs to face up to the failures of austerity, and stop imposing such measures against its neighbors.

 

The Pros And Cons Of Joining The Euro

In fact, there was a problem with the structure of the Euro itself. With the introduction of the common currency, the affiliated countries no longer needed to consider changes in exchange rates.

Germany, with its competitive economy, could now export without worrying about rising exchange rates. In addition, the ease of the movement of funds allowed Germany to profit through financing by actively loaning money to neighboring countries. At the same time, it became easier for countries such as Greece to borrow money from German banks.

There are, however, drawbacks in the unified currency system. Each country lost their sovereign right to control the amount of money circulating in their economies. This loss extended to the area of financing as well. Unable to ease their monetary policy or engage in accelerated government spending, Greece is unable to create jobs.

A “Union of the Weak”, where less competitive nations rely on German competitiveness, will inevitably result in undermining the European Monetary Union.

 


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The Liberty Opinion: Germany’s Role in the Euro Crisis
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