Angela Merkel’s tenure will be remembered as Germany’s, and Europe’s, cruelest paradox. On the one hand, she dominated the continent’s politics like no other peacetime leader — and is leaving the German chancellery considerably more powerful than she had found it. But the way she built up this power condemned Germany to secular decline and the European Union to stagnation.
by Yanis Varoufakis
Part 3 - Episode 2: Pan-European Austerity
When Lehman Brothers went bust in September 2008, its last CEO begged the US government for a gigantic credit line to keep his bank afloat. Suppose that, in response, the US president had replied: “No bailout and, also, I am not allowing you to file for bankruptcy!” It would be utterly absurd. And yet that was precisely what Angela Merkel told the Greek prime minister in January 2010 when he desperately begged for help to avoid declaring the Greek state bankrupt. It was like telling a falling person: I am not going to catch you, but you are not allowed to hit the floor either.
What was the point of such an absurd double nein?
Given that Merkel was always going to insist that Greece take the largest loan in history — as part of the hidden second bailout of the German banks (see above) — the most plausible explanation is also the saddest: Her double nein, which lasted a few months, succeeded in infusing such desperation in the Greek prime minister that, eventually, he agreed to the most crushing austerity program in history.
Two birds were thus killed with one bailout: Merkel surreptitiously bailed out the German banks for a second time. And universal austerity began to spread out across the continent, like a bushfire that began in Greece before spreading everywhere, including in France and Germany.
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