The Poverty Lie: How Europe's Crisis Countries Hide their Wealth

thenews 2013.04.28 13:57

How fair is the effort to save the euro if the people living in the countries that receive aid are wealthier than the citizens of donor countries like Germany? A debate over a redistribution of the burdens is long overdue.

The images we see from the capitals of Europe's crisis-ridden countries are confusing to say the least. In the Cypriot capital Nicosia, for example, thousands protested against the levy on bank deposits, carrying images of Hitler and anti-Merkel signs, one of which read: "Merkel, your Nazi money is bloodier than any laundered money."

German Chancellor Angela Merkel was greeted by a similar scene when she visited Athens in October 2012. An older man with a carefully trimmed moustache and pressed trousers stood in Syntagma Square. The words on the sign he was carrying sharply contrasted with his amiable appearance: "Get out of our country, *****."

Despite these abuses, the protesters and all of Merkel's other critics in Rome, Madrid, Nicosia and Athens agree on one thing: Germany should pay for the euro bailout, as much as possible and certainly more than it has paid so far.

They argue that Germany is a rich country that has benefited more than all others from the introduction of the euro, and that it has flooded other European countries with its exports, becoming more prosperous at their expense.

thenews 2013.04.28 16:02 #1

Comment of the above article :

Much has been said about the relative disparity of wealth between Germany and the rest of Europe, with the conventional wisdom being that Germans are rich and everyone else poor. This assumption has been challenged to the core recently, with some studieseven suggesting that median household wealth in places like Cyprus is far, far greater than that of Germany, contrary to previous assumptions. In turn, this helps to explain the lack of "eagerness" of the Germans to constantly "assist" with the bailouts of peripheral countries by directly funding or assuming debt guarantees, or otherwise be loaded with the primary burden of future inflation if and when the ECB's creeping monetization of European debt, both directly and indirectly via PIIG bank collateral, unleashes the Weimar flashback tsunami. In this context, it is easy why it was the Germans who were intent on demolishing not only Russian billionaire savings (which as the Spiegel article below demonstrates, Germans are convinced are largely ill-gotten and hidden), but also why the punishment should stretch to uninsured depositors.

After reading the Spiegel article below, which reveals so much about German thinking, it becomes very clear that not only is Cyprus the "benchmark", but that the second some other PIIG country runs into trouble again, and its soaring non-performing loans inevitably demand a liability "resolution" a la Cyprus, it will be Germany once again at the helm, demanding more of the same equity, unsecured debt and ultimately depositor impairment. As the following punchline from Spiegel summarizes, "It would be more sensible -- and fairer -- for the crisis-ridden countries to exercise their own power to reduce their debts, namely by reaching for the assets of their citizens more than they have so far. As the most recent ECB study shows, there is certainly enough money available to do this." And that is the crux of the wealth-disparity demand of the European Disunion.