German fantasies

Germans like Greece: They enjoy eating souvlaki with tzatziki at their local Greek restaurant, spending their vacation at the beaches of Crete and showing off their elite education by reciting Ancient Greek ballads. But that's how far European solidarity goes when it comes to money. Now is the chance for the Germans to project both their angst and fantasies onto the Greek.

In response to today's visit of Papandreou in Berlin, SPIEGEL dramatically titles: "Athens begs Berlin for political help". Shortly before the plane touched down, FDP Minister of Economics announced that "The German government does not intend to give a cent". The Greek, according to the German consensus, must suffer.

You could always argue with integrity and moral hazard, but that is no excuse for the often harsh statements and recommendations. The ruling coalition proposed Greek to sell off national assets, including land and islands to serve the debt (how about setting up a second German Ballermann?). Bavaria-based Ifo-economist Sinn even proposed to kick out Greece from the EMU altogether. Merkel underlined the need for the Greek "emotions to not run so high", but I really wonder who is actually hysterical? After all, Germany is the country to most frequently break the Stability and Growth Pact (1994, 1996, 2003-2006). 

At least the prediction markets are more laid back. Intrade's prediction for any EMU country to drop out in this year has fallen from 30% end of 2008 to about 12%.