Courtesy of Mish.
Virtues of Germany vs. the Vices of Greece
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.
Background Notes
Some snips from this post are from an email from Michael Pettis at Global Source Partners. Pettis’ email contained a 32 page PDF that I will attempt to condense down to a couple pages, while adding a few pages of my own on topics he missed or went over lightly.
Except where noted, anything below in blockquotes is from Michael Pettis. Emphasis throughout is mine.
In regards to comments from Pettis, he says “As my regular readers know, I generally refer to the two different groups of creditor and debtor countries as ‘Germany’ and ‘Spain’, the former for obvious reasons and the latter because I was born and grew up there, and it is the country I know best.
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