I know it has been a long and cherished tradition to blame the Germans for just about anything from the end of fox hunting to the trials and tribulations of the euro, but as popular as it may be, trust me, it is not always true. And I am not only saying that out of misplaced patriotism. Promise.
Let's just forget about fox hunting for the moment (although my sympathies have always been with the fox!) and concentrate on the euro.
Before we go into the details of interest rates, the need to adjust economic imbalances and the allegedly inevitable grim truth that some of the now struggling euro countries should not have been included in the euro zone in the first place, let's just get some of the favorite arguments of die-hard euro sceptiscs out of the way.
First - yes, that ol' chestnut - one size fits all (in terms of interest rates) simply doesn't work. Or it doesn't work well.
But it does not work well anywhere else either.
In the Unites States, for example, the economic differences between Californiaand Idaho are far greater than those between Germany and Greece. Ireland, Greece and Portugal's combined problems are small beer compared to the debt and budgetary problems of the bankupt state of California. And nobody is suggesting that California leave the dollar and print Californian Pesos instead, or have I missed the headlines on that one?
Second - another one of my favorites - the Germans have to adjust their (highly successful!) economic model in order to level out some of the global imbalances.
I just love this one! Honest! The suggestion (curiously enough often voiced by economists and analysts with an Anglo-American background) is that the Germans should simply become more like the Americans or the Brits and embark on overspending and over-indebtedness to try and pay for goods and services they can't afford.
Sorry, but I simply fail to see how that approach could cure the world's ills. I thought that was how the global debacle known as the "subprime crisis" started in the first place.
I would also point out another basic flaw of this argument.
Are you seriously suggesting that a highly successful business model, a model that kept Germany on the list of top-performing nations for more than half a century should be swapped for a model under which Germany is less productive so that the less efficient economies around us don't quite look so bad?
If that is the master plan, then let's start printing Deutschmarks now and euro be damned!
The euro - regarded as an impossible endeavour by many sceptics - has been a shooting star. Within its first decade, it became world reserve currency number two, its share in global reserves almost doubling to just unter 30 percent and counting.
And, guess what, this has happened largely at the expense of the dollar and (and to a lesser extent of yen and sterling). So one might point out that for a grossly over-indebted nation like the Unites States to have "the only game in town" currency would be much more preferable to having to compete.
Compare it to Boeing being much happier before the advent of Airbus on the world stage. Get my drift?
Back to "blame the Germans": should Germany be less hard-headed and Teutonic about tackling the present debt crisis and simply be "nicer" to the notorious spendthrifts in Greece, Portugal or Ireland? Nein! There's no such thing as a free lunch - no matter in what currency.
When Greece, Portugal, Ireland (and arguably Spain and Italy) joined the euro, they effectively moved from a soft currency bloc to the deutschmark bloc. And with that they were given deutschmark (low) interest rates on a golden platter. Almost like giving a low-income earner a no-limits gold Amex card. And Greece, Ireland and Portugal did with their gold euro card what could be expected: they spent. And they spent more. At low rates. And eventually the card company - i.e. the markets - demanded repayment at the equally expected higher rates.
What happened next?
The overspenders went to the European Union and demanded aid.
There was no choice, of course, because if the euro boat was heading for an iceberg, it would affect all decks, not just third class down below.
But funnily enough, Greece, Portugal, and particularly Ireland, did not say "thank you very much" for being given blanket credit guarantees and access to funding at a lower cost. They proceeded to complain about the nasty Germans, because the nasty Germans demand what any banker would: that the indebted customers get his finances in order. At any cost. Sadly, the cost has to be borne by tax payers of the countries in question.
In Germany as well. The productive, efficient, not-overspending Germans have to pick up the tab for their less efficient neighbors. But ultimately there is no other way than austerity. You can't spend yourself out of a debt crisis (a plain and simple truth for the US as well, by the way).
Here's another truth: The euro was a quid pro quo for German unification. It's an open secret that the Germans (or, then Chancellor Helmut Kohl) "bought" the euro and sold their much beloved deutschmark in order to get France to agree to German unification.
Even at the start, it was very much a multi-speed euro zone, comprised of the old deutschmark bloc (the Benelux countries, Austria and - at a stretch - France) and the shaky soft-currency group with Italy, Spain, Portugal and Greece. Arguably it would have made a lot more sense to start the euro just with the old deutschmark-pegged currencies. But that was politically far too unambitious - and far too sensible. When are politicians ever sensible?
So what is happening now was practically pre-programmed. The Germans should be used to it. As a federation that is combined of a number of states (Laender) with very different financial and economic characteristics, the Federal Republic of Germany has a system of regional transfers of tax funds. Under this system, the "rich" German states support the weaker ones.
It is a simple question of solidarity. The system has never been seriously questioned. And it has also been successful. Whereas the old inustrial stronghold, the steel and mining belt in the state of North-Rhine Westphalia had to share its tax wealth with the structually weak southern states of Bavaria and Baden-Wuerttemberg for decades, the South, with its BMWs and Porsches, has started supporting the North.
Success or failure of the euro should be determined on the basis of a timescale that compares with Germany's evolution. Fifty years, rather than 15.
As for "blaming the Germans" for the trials and tribulations of our less affluent euro peers: blame the Germans for having traded their deutschmark for the euro, but don't blame them for being too successful.
And as for the US, don't be sanctimonious and patronizing! The spendthrift Greeks, Portuguese and Irish spent much of their euros on Beamers, Porsches and Mercs. And let's face it: Just like North-Rhine Westphalia had to support Baden-Wuerttemberg for a generation or two, Germany will have to support Portugal or Greece or Ireland, hoping that one fine day this solidarity will pay - just like it paid for North-Rhine Westphalia.