The most terrifying words in the English language, according to Ronald Reagan, are: “I’m from the government and I’m here to help.” Today, for some Europeans, they are: “I’m from the EU and I’m here to bail you out.”
Germany and the single currency have been made scapegoats for the problems of member states and for Europe’s inability to overcome the continent’s financial and economic crises. Berlin is accused of lacking solidarity, imposing contractionary policies and gaining competitiveness at others’ expense. The euro is blamed for depriving countries of their own central banks’ ability to act as lender of last resort and provide unlimited liquidity to the government and banks; and for depriving national policy makers of scope to devalue, thereby trapping them in a vicious spiral.
Germany is flabbergasted at being made the scapegoat. It sees itself as a victim, not a perpetrator. It has contributed substantial funds and assumed a great deal of risk for the five bailouts to date. And it has sacrificed much in the past decade to generate employment at home, with real wages barely higher today than in 1999.