40 – Where Political Fallacies Begin (22 Oct 2012)
The two subjects that hold European policymakers and the more serious part of the American electorate currently in suspense offer perfect and dismal examples of delusion because accompanying stories – where the euro crisis came from and President Obama's track record – have been given the wrong beginning.
For North Europeans relying on mainstream media, the story of the euro crisis never had a beginning anywhere close to where it should have been. This deficiency was mostly due to another political phenomenon deserving more scrutiny than it receives: When governments or other institutions with authority are faced with an unpalatable subject, prompting questions that may spell deep trouble for them, they change the subject hoping that no one will notice. That is what Angela Merkel did when the credit crisis of 2008 revealed that German banks had swallowed so much of the toxic assets created by their American counterparts that this had in effect killed them. But in Merkel’s story the crisis began with a lazy Greek population, consisting of lots of tax evaders and overpaid officials who took too many holidays. The French and the Dutch authorities were similarly embarrassed with the factual bankruptcy of their banks, and gratefully endorsed the story that Merkel was allowed to dominate with in the headlines.
This helped stoke strong indignation that spread over the northern euro countries; why should we, well-behaved taxpayers, have to bail them out? By the time the German broadsheet Das Bild had created a commonly accepted picture portraying hard-working Germans versus irresponsible Greeks there was no going back for the Chancellor. That tabloid, along with the domestic financial interests and their allies, blocked a return to rational analysis of the bank crisis, preoccupied as she was with minimizing threats to her staying on as chancellor in a new coalition after next year’s elections.
There were other possible beginnings that would have allowed a sound approach to the controversy from a different direction. Such as low German domestic demand compensated for by years of voluminous German exports to peripheral Europe, including Greece, which required funds for buying that German stuff; funds happily being pumped into southern Europe by German banks. As these were raking in premiums and interest, their credit risk analysts slept soundly because the credit rating agencies had given their blessings with blanket triple A ratings for all the euro countries. Is Greek governmental irresponsibility then only a figment of people’s imagination? Who cares? Merkel changed the subject. Whatever Greek conduct or motives, these did not cause the euro crisis.