Germany has blamed others for the global financial crisis, but German loans funded much of the reckless spending. It must now agree to a common mechanism for Europe to pay its way out of crises. Refusing this responsibility endangers Germany and the entire euro project.
Over the last 10 years, while Spain, Ireland, Portugal, and others partied on low interest rates, the German people cut their wages, endured punishing structural reforms, and accepted the pain of 5 million unemployed in a drive to modernize their own industries. Their sacrifices have brought them a large trade surplus and an 80 percent rise in German exports to China.
No other country could have simultaneously borne the costs of bringing 16 million people from Eastern Europe into a unified state, or joined the euro at such an uncompetitive rate and yet still rebuilt their country’s exporting strength.
Germany now has Europe’s strongest economy, and Chancellor Angela Merkel and the German people deserve praise for the German export achievement. But if that were the only story to tell, then the cure for the current crisis would be simple: Follow the German example of austerity, and, if that fails, even more austerity.
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